Penny Resources Stocks - is it game over?

[LRG]

There have been a lot of people trading the penny dreadful resources stocks over the last couple of years and those who time it well have been making very good returns.

Does anyone think it is "game over" for this method of trading. The gloss seems to be coming off resoureces stocks and with the credit squeeze it is unlikely any under-capitalised companies could finance a real start up.

The AOM, CAG, LOD, NSL, EGO types don't seem to be going anywhere presently - are they about to be wiped out. OR, are they actually going to break up!!

 

[whatisthemason]

I think there is still the opportunity for a good penny stock to give a good return still, depends on their business model, who's in charge, their debt position and more importantly in resources, the ability to turn from prospector to producer e.g. you'd set NSL aside from most penny stocks (as Young Trader has mentioned) because they may purchase an operational ore mine, their potential is promising.

The world still needs resources, and I think the world still needs competition amongst the Rio's and BHP's of the world, so any company with solid potential in my book is a good thing and with the right market conditions and luck should pay off for you.

 

[nunthewiser]

"e.g. you'd set NSL aside from most penny stocks (as Young Trader has mentioned) because they may purchase an operational ore mine, their potential is promising."........... LOL well just had a quick look at NSL and found it to be YET another poundpup changing from market darling to market darling just to keep floating along , good luck but this chameleon aint for me

 

[nunthewiser]

RE .....NSL when Bios and the meical sector omes back into play will they change back ? or wait for power puffs to become the market darling and tell the world there building them ?? ...... lol sorry for my cynicism but boy . NSL just another on the list of slush funds that just change there clothing every time it gets cold .......

 

[whatisthemason]

RE .....NSL when Bios and the meical sector omes back into play will they change back ? or wait for power puffs to become the market darling and tell the world there building them ?? ...... lol sorry for my cynicism but boy . NSL just another on the list of slush funds that just change there clothing every time it gets cold .......

Very interesting comment, very fair to say the directors could be jumping from one industry to the other because resources seems to be the "Darling" and cynicism should not be apologised for, very fair to be cynical, especially during this year. However, you didn't answer LRG's question, you just canned NSL

 

[drfuzzy]

Interesting that Julia Gillard has endorsed the new Mineral Resource Rent Tax and the structure of this new tax is such that it will only encompass the biggest 350 resource stocks. There are more than 2500 resource stocks on the ASX. Therefore, the smallest cap resource stocks will benefit. The new tax doesn't begin to kick in until profits exceed $50m a year. I can see this leading to the next boom of the junior miners.

 

[skyQuake]

Interesting that Julia Gillard has endorsed the new Mineral Resource Rent Tax and the structure of this new tax is such that it will only encompass the biggest 350 resource stocks. There are more than 2500 resource stocks on the ASX. Therefore, the smallest cap resource stocks will benefit. The new tax doesn't begin to kick in until profits exceed $50m a year. I can see this leading to the next boom of the junior miners.

Disagree, most of the small caps are still in the exploration stage of life.
With the loss of the 40% rebate, small caps are the relative losers.
Some mid caps may benefit esp with the exclusion of copper, nickel etc.