Why I think asset speculation is downgraded Companies have a...

Why I think asset speculation is downgraded

Companies have a life cycle.
1 Seed capital, which is discounted stock for the risk
2 Punters, investing at a low price and taking big risks for large rewards.
3 Momentum traders who buy on good news
4 Followers who start buying on repetitious good news as success increases.
5 Speculators who believe its the next big thing.
6 investors who follow large capital
7 Long term investors who follow the big picture.
8 Day traders who trade in and out on good news.
9 Performance investors that buy or sell based on performance.
10 Sentiment investors that follow the market. vulnerable to the market sector and general market..

RMS has a lot of long term investors and Performance investors, Speculators lead the market but performance investors sometimes follow out of fear. Generally speaking when a company transitions to a miner the market values stock based on performance and transparency and less so on speculation.

SPR was valued based on speculation therefore when SPR is absorbed into RMS. it will have less impact because RMS is more linked to Performance than Speculation. The extreme rise in gold price has ignited more speculation in all gold companies including RMS but performance still plays a vital role.


RMS has a PE of 7.4 which indicates RMS is performance based and very vulnerable to gold price movement.
The low pe identifies the uncertainty of RMS to deliver consistently higher profits. The unusually extreme driving forces and how it will effect gold long term is uncertain.

SPR have a lag time of 24 months, this creates uncertainty and will result in the market undervaluing SPR as a RMS asset. We don't know what the gold price looks like in 24 months . There will be a lag until there is more development in SPR assets.

Summary.
The effect of 24 months lag time development, Gold price uncertainty, RMS being more performance based than speculative will likely initially result in SPR being undervalued as a RMS asset.

I had a conversation with a director 20 years ago and we joked how companies with nothing were sometimes valued higher than producing companies.
Mature miners become valued like industrial stock.
Nonperforming assets don't always make a large difference to market capitalization.
The merging of SPR and RMS will value both together based on performance like an industrial stock.