Is Graphite Corp (GRPH) A Safe Investment As Per Today’s Market Condition ?
Thu, Feb 28, 2013
Graphite Investment In USA
In early 2012 graphite stocks were all the rage.
At the time shares of the early leaders in the emerging graphite sector were soaring too. Northern Graphite (TSXV:NGC) shares had gone from 80 cents per share to a high of $3.30 in six months. And the hottest IPO of the year was Flinder Resources (TSXV:FDR). It was financed at 50 cents a share and surpassed $2.50 per share on its first day of trading.
When your editor attended a graphite investment conference in February 2012, it was standing room only.
All the signals were clear to any contrarian investor – get out of graphite investments now.
Since then graphite stocks crashed back to reality. Northern Graphite and Flinders Resources shares have lost more than 60% of their value. And the dozens of smaller graphite companies traded for a few pennies per share.
But over time, most investors remember the good times and forget the bad times.
Frankly, the graphite euphoria made investors a lot of money quickly. And now the enticements of quick profits have attracted aggressive stock promotions still in graphite stocks.
The latest of them is Graphite Corp (OTCBB:GRPH).
This “company” has a few prospective graphite properties in North America and has attracted significant attention in the last few weeks.
It, however, has all the warning signs of a trend that will cost investors dearly.
First, it’s listed on the OTC Bulletin Board. Although not all companies on the OTCBB are fundamentally worthless, there have been enough highly-promoted stocks on this trading platform that any investment that trades that way should be treated with a great deal of caution.
Next, there have been plenty of regular and meaningless press releases. Apparently the company will be attending an investment conference. Is that press release-worthy news?
It also has almost no money. At last report it had a cash balance of about $310,000. That’s not enough to drill and develop a graphite project. To date Northern Graphite has invested more than $10 million into its project and still doesn’t know whether the project is a “go” or not.
Its web site has probably has had more time and spent on it than the actually property itself. This is always a warning sign because it shows the company wants to get investors excited about the huge opportunity in the sector and not focus on the company’s prospects.
Finally, it has been promoted heavily though various stock tout services. According to StockPromoters.com, a website which tracks stock promotions , there have been 124 e-mail blast promoting investors to buy shares of Graphite Corp. The promotions have cost anywhere between $10,000 and $60,000.
In the end, the prospects of Graphite Corp are extremely dim.
If historical patterns hold true, shares have fallen from 80 cents to 30 cents and it won’t be long until they are trading for less than 100 cents.
If you are an investor Looking For Graphite Investments, the following is a complete list of graphite stocks. The Graphite Stock list is not complete, but it includes a number of companies like Northern Graphite and Flinders Resources which have attracted management teams which have been successful in the past, millions of dollars of capital, and are in the later stages of development.
The graphite downtrend has been steady since early 2012 so I can’t recommend going against it. But if and when it does turn around, the most money will be the high quality graphite companies who spent their money developing a mine rather than e-mail blasts.
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Executive Editor, Contrarian Insights
The Group of Big Investors in United States.
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