Carlisle Goldfields Limited a speculation not an investment

Jan 9th, 2015 – Comment

The company reported the private placement with Aurico Gold in December and it hasn’t done anything for the stock so if that was the rationale for the investment you need to have another look at your thesis.


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CGJ

Hi Lou,

I recently purchased a small amount of Carlisle Goldfields on the news that they had a private placement deal and an earn in deal from Aurico Gold. After performing my own due diligence I felt these were positive catalysts for a potential mid term pop in the stock after tax loss selling abates. I would like to hear your opinion on Carlisle especially from a technical point of view because I lack knowledge in that area – aside from what I’ve learned from your column of course.

Cheers,

Dave

 

Hey Dave,

Thanks for the assignment and good to hear you are deriving some benefits from the analysis. Carlisle Goldfields Limited (CGJ TSX) is a junior mining company with gold and silver projects in the northern regions of Manitoba and Ontario. Their major effort is going towards their Lynn Lake gold camp in Manitoba. Lynn Lake is a past producing area and has access to extremely low cost electricity and paved roads to all of their sites in the zone.

Here’s the rub. CGJ has a market capitalization of $11.53 million, an average daily volume over the last thirty days of 640,856 shares, and a $0.03 stock price. These factors have to put this stock squarely in the speculative section of your portfolio. There could be some increased interest in the stock but we haven’t seen much to this point in 2015.

What also needs to be considered is that the company isn’t generating sales so it has to issue stock to drive its development plans which contributes to dilution of existing shareholders. Finally the prospects for the stock and indeed the entire precious metals sector could use a goose from increased prices for gold and silver.

An examination of the charts will help add texture to your evaluation.

 

CGJ

The three-year chart tells the tale of a decline that has been in place for a number of years. An established downtrend with a death cross are not to be ignored when considering a stock for your portfolio. The trend is your friend until it ends and the established trend is down. The company reported the private placement with Aurico Gold in December and it hasn’t done anything for the stock so if that was the rationale for the investment you need to have another look at your thesis.

 

 

 

 

 

 

CGJ2

The six-month chart illustrates the sell signals generated by the RSI and the MACD in November as the shares came to the end of leg up that started in October. At the present time there are no indications that we can expect a trend reversal.

I have often advised that we can invest, speculate, or we can gamble. CGJ is a speculation with a number of factors that push it to the higher risk portion of that definition.

Make it a profitable day and happy capitalism!

 

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