First, we have to ask, "Is GWG stock price really low?" Lets take a moment to look over its history to see.
In 2009 the stock was trading for 5 cents a share. Today it closed at 29 cents. That represents a 4 year return of 580%. That seems like a pretty good investment for the early adopters.
But, you may say, it is down from a high of $1.23 in early 2011. That is a fair question. What was happening in 2011? China had just announced export quotas on rare earth metals, throwing the western markets into a speculative frenzy. Japan, the world's largest user of rare earths, and China were embroiled in a heated dispute and China halted rare earth shipments to Japan. Rare earth prices spiked to dizzying record high prices and any company that claimed to have a rare earth deposit saw their stocks soar to prices far above what their development would merit. It was in this environment that Great Western stock jumped to $1.23. The ensuing bursting of the ree price bubble brought the price of all rare earth stocks down and Great Western was among them.
Since then, the rare earth industry has taken more hits, with leading companies like Molycorp and Lynas making inflated predictions they couldn't keep. With each failure their stocks fell. Molycorp was once at $78 and their blunders have dropped them to less than $8. Lynas, with its own set of misdeeds, fell from a high near $3 to a low under 60 cents. The tribulations of the two big names in the industry carried over and damaged the stocks of all stocks in the industry. Great Western was no exception. The investment community has adopted a 'fool me once shame on you, fool me twice shame on me' attitude toward all rare earth stocks. We are just waiting for Great Western to show they have the ability to deliver the goods before the share price can break out of the funk caused by Molycorp and Lynas.
Admittedly, Great Western has missed some timelines, but the fact remains that this company is steadily progressing to full integration of rare earth production from mining through to metal and alloy production. As the market becomes convinced the progress is real I think we will be amazed at what happens to the 28 cent stock price..
Why should we expect Great Western stock to begin to rise from here?
1. Read the article posted by Ginosailing this evening about the rare earth market finally beginning to strengthen.
2. Take a look at the December 31st corporate update to see the impending news expected for early 2013. http://www.gwmg.ca/html/news/media-releases/index.cfm?ReportID=203476 There are some very important news items expected!
So, if you should ever hear a donkey braying about how funny it is that Great Western's stock price is so low, take a moment to consider the 580% four year return, understand that there are factors beyond their control weighing it down today, and know that in my opinion this low share price is soon to be a thing of the past.
I now cede the floor so the donkey can bray about the price being low and to give out his Ha ha ha's.