Gold is, quite simply, gold. At $370 per ounce, few notice. At nearly $1600 per ounce, well that makes a world of difference.
On Wednesday, August 8, 2012, The Graystone Company (OTC: GYST) announced that it had finally shipped its first bit of gold out of Peru to test the country’s export system for getting gold from the South American country to refineries in the United States. The shipment itself was meager, a mere 10 ounces. However, with the company on the cusp of beginning its mining operations in the next few months, it was a necessary step.
The company did not mention where this gold came from. Was it from its property in Gorila, or simply purchased elsewhere?
Today’s investors must have felt like Pizarro and other Spanish Conquistadors of the 16th century. While 1527 represents an important year in the Spanish Conquest of the Inca Empire, today’s gain of nearly 60% represented a huge day for many who hold its stock. By no means a huge day for those who have held stock in Graystone at over $1.00 in the past year, but a massive day for those who watched their investment gain 56% in a single day of trading. Graystone’s stock finished the day just under $0.02 after breaching that barrier on two separate occasions, while trading over 25 million shares.
In addition to last week’s news regarding the first shipment of gold from Peru to the United States, Graystone shared a press release with the world that accounted for a good portion of the stock’s gain today. The company shared both its long term and short term goals with investors, and compared itself to other recent upstarts in the industry, namely Santa Fe Gold Group.
Whether this is an accurate comparison or representation remains to be seen, but the company stressed that its first Peruvian acquisition occurred only 15 months ago when it finalized the purchase of a property in Gorila, Peru in May 2011. The company has completed the construction of a mining camp on this site since then, and plans to announce the beginning of active mining in the next couple of weeks.
The comparison to Santa Fe Gold Group was a simple annual numeration of Santa Fe’s revenues:
- 2008: $0
- 2009: $72,624
- 2010: $320,145
- 2011: $6,440,897
- 2012: $8,144,512 for the nine months.
This, at best, represents true numbers that have nothing to do with Graystone’s own future successes. It is more a forward-looking statement that means nothing if Graystone fails to locate deposits that Santa Fe was able to find with its first land acquisition.
At the end of the day, Graystone simply excited investors with little to hang their actual hats on at all. The company seems quite pleased with reaching a contract with an unnamed U.S. refinery. The CEO, Paul Howarth, then went on to suggest that Graystone will receive 97-99% of the spot price for this raw gold.
This sounds fantastic, if 98% of something tangible ever comes to fruition. However, simple math reminds most investors that 98% of nothing is, well, nothing. Graystone remains and will continue to remain a huge gamble.
Peruvian gold, though, will always remain something that can get the market and investors very excited.