Gold Resource Shares Plunged: What You Need to Know

• Report this Comment On July 05, 2011, at 1:19 PM, RodCarlson100 wrote:

  Your comments presume validity to Barron's statements. Be aware there is a controversy relating to the article, considered to be a "hatchet job".

• Report this Comment On July 05, 2011, at 1:35 PM, TMFZahrim wrote:

  Fair enough, @RodCarlson100, but there's no arguing with the short interest or the inflated valuation. Also, coming up with convenient but non-standard accounting terms raises red flags for me. Whether the Barron's article is entirely on target or not, I'd still prefer a proven property. Isn't that the core argument for gold investments in the first place?

  Anders

• Report this Comment On July 06, 2011, at 4:00 AM, IamFalcone wrote:

  What you really need to know #1:

  A small group of under-informed, over-leveraged hedge funds holds a huge north of 100 million USD short interest exposure in GRC. Keeping this exposure comes with costs in form of interest (15%-40% to the lender of GRC stocks; and lend they must unless they are criminally naked short) and dividend payments. In view of the a) huge risk that comes along with a short position this size, b) the fact that major shareholders belong to the best-informed investors in the gold scene (Tocqueville Gold Funds) who do not take issue with Barron's-article-"red flags" (raised by a author who admits to be in contact with short position holders), c) a bullish positive divergence having built up between bullion and bullion stocks indicating that the correction in gold an gold stocks is almost over, d) the prospect that the position cannot be closed profitably even if it is profitable on paper at the moment - any wonder someone is panicking?

  What you really need to know #2:

  [GRC] NEWS

  PRESS RELEASE

  July 5, 2011

  Amex: GORO

  GOLD RESOURCE CORPORATION CONFIRMS RECORD SECOND QUARTER PRODUCTION, REVENUE AND EARNINGS

  COLORADO SPRINGS – July 5, 2011 – Gold Resource Corporation (NYSE Amex: GORO) is pleased to confirm record mineral production for the second quarter of 2011. Gold Resource Corporation is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico.

  Gold Resource Corporation’s President, Mr. Jason Reid stated, “I am pleased and proud to report that the Company’s second quarter will reflect record mineral production, revenue and earnings after achieving its first profitable quarter as a mining company during the first quarter of 2011. We look forward to sharing the full second quarter report in the near future.”

  To view the entire press release, click or cut and paste the following link into your web browser: http://goldresourcecorp.com/releases/GRC-2011-07-05-2.pdf

• Report this Comment On July 06, 2011, at 7:56 AM, IamFalcone wrote:

  Just to add another reference to Barron's hatchet job piece:

  http://www.goldreso urcecorp.com/releases/GRC-2011-07-05-1.pdf

  *Issue closed*

  P.S. Now just watch the shares go bust in the next couple weeks

• Report this Comment On July 06, 2011, at 7:58 AM, IamFalcone wrote:

  Correction to my posting above:

  "P.S. Now just watch the SHARES go bust in the next couple weeks"

  should be:

  P.S. Now just watch the SHORTS go bust in the next couple weeks

• Report this Comment On August 25, 2011, at 6:02 AM, 5teadyEddie wrote:

  AS far as I understand it, because GORO does not have Proven or Probable resources, it is still classified as an Exploration Stage Company by the SEC.

  This prevents it capitalising any exploration of other costs on its balance sheet like most other mining companies. So exploration, construction and development costs all have to be written off in full each quarter, which is a major reason why the P&L looks bad and the balance sheet is small.

  It also explains why GORO constructs a 'mine gross margin' figure which ignores expensed construction and overhead costs, since these would not be part of comparable figures produced by other miners.

  Having said that, the production figures are certainly much poorer than expected: the claimed current run rate of 80,000 oz pa has to be delivered in Q3.

• Report this Comment On August 25, 2011, at 9:23 AM, garymellon wrote:

  As a British investor with just under 1% GORO stock I can confirm that I'm one of the many long term investor who is not worried by the large short position that has built up in this stock. Only in America could negative comments be written recently by the likes of Barron's and some Fraudster website who both confirm they have taken short positions in the stock.What they may not be fully aware of is that there is a large contingent of long term British/European and Chinese investors who together with Hochschild - a UK listed company (27%) and other overseas investors have close to 40% of the outstanding shares. However due to CREST (if you don't know what CREST is you don't invest in overseas markets) we are not listed in the share register "local" nominee accounts. I therefore estimate that the combined short position is about 30% rather than10% of the free float, as noted in one article (5m of 15m shares). Therefore unless they are absolutely sure of there facts they are going to find it hard to capitalise any profits they may force timid investors to surrender.

  GORO have upped the pressure overnight and increase the monthly repayment by 25% to $0.05 per share. Gold Resources have added a kicker by further announcing it has now instituted a regular monthly dividend policy to replace its special dividend. It looks like the shorts may have been caught with their pants down. How bare..ish is that.

  As the chinese say "May you live in interesting times"

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