Why Medusa Mining’s Share Price Rose Today

What Happened to Medusa Mining’s Share Price?

Shares in Philippines based gold miner Medusa Mining [ASX:MML] soared around 11% today, after rising nearly 9% on Friday. Since bottoming in November, the stock price is up more than 100%. Although that isn’t as good as it sounds. The stock is still down more than 50% over the past year, as gold stocks have been out of favour.

Why Did This Happen to MML Shares?

While there was no specific announcement from the company, gold stocks were severely beaten down at the start of the year. The Aussie dollar gold price has rallied strongly and gold miners are now clawing back some of their prior deep losses. A bullish technical breakout occurred in Friday’s trading session. Strong follow up buying continued today. Hence the rapid share price gains.

What Now for Medusa Mining?

Medusa Mining suffered from a badly managed expansion plan over the past fee years. Last year, the Managing Director left, and the founding CEO and major shareholder returned to get the company back on track.

So far, things are looking good with the new plant performing better than it ever has. The good news is there’s still room for significant improvement. Meanwhile, the market seems to have forgotten about Medusa. It trades on a price-to-earnings multiple of less than three times.

This is incredibly cheap and suggests the market thinks gold is going lower or investors are just not interested in gold stocks and they therefore represent a bargain.

I recently recorded a presentation to argue that gold is in the early stages of a new bull market and that tremendous opportunities await early stage investors. The performance of MML recently bears this out. The presentation is a few weeks old now, but still massively relevant. If you want to take a look, click here . It’s free!

Regards,

Greg Canavan+
for Markets and Money

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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