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Precious metals firm may already have peaked.

Gammon Gold (AMEX: GRS, Stock Forum) should probably be at a 52-week high. But it is not even close, trading at $10.26 off a peak of $14.50.

The company brought in just over $51 million in the last quarter up from almost $44 million in Q1 2007. Production costs dropped by a third which brought net income in at $9.3 million compared to a loss of $10.7 million last year.

GRS has barely enough cash to buy a bus ticket with $5.5 million in the bank. The company says its mining interests and property are worth $575 million. Gammon has a market cap of $1.2 billion, which does not say much for its enterprise value.

Both gold ounces and silver ounces sold in Q1 fell. That may not be bad, but investors would not want to see it as a trend. While Gammon says its total ounces of gold sold should rise from 155,000 this year to 213,000 ounces in 2010, and it forecasts the price of gold falling in each of the next two years. Its forecast for silver prices also steps down in 2009 and 2010.

It is probably not a good sign when a firm says its major products are going to lose a lot of their value.

 

ABOUT THE AUTHOR
From the news desk of 24/7 Wall St.

This report was prepared by 24/7 Wall St., LLC exclusively for Stockhouse. 

 
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Comments
Definitely true, this article seems a tad pessimistic. I do not think it is just to state that "It is probably not a good sign when a firm says its major products are going to a lot of their value" because no one can truly predict the direction gold prices will go in and it seems they may have just been being conservative? It is surprising that with such a large drop in operating costs the stock remains $4 below its 52 week high.
I doubt the situation as severe as you have word it. Although the dropping in gold prices comes as a disappointment, however I do not believe gold is at its end already. Gold seems quite uncertain on its movement, but I highly would disagree with pulling out altogether.
This site blows now......
Your information about Gammon Gold is totally wrong. I follow many gold companies and I am recomending people to buy Gammon Gold. For instance this year, 2008, I believe they produce over 300,000 oz. of gold equivilant. Your information on the front page can lead people in the wrong direction if you do not do your home work. Shame on you!
coming from Wall st. I dont trust this prediction.
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