Yesterday, Brazil Gold Corp.(OTC:BRZG) stock, experienced the positive effect of synergy created by company announcements and stock promotions. The increase in price was only $0.01, but the volume of traded shares, was far beyond anything that has happened in the last six months – more than 1.2 million shares were traded during the session. In fact, the stock performance, since the beginning of the year, shows a 300% increase in price up to now, so positive notions and expectations continue to mount upon announcements like the one from yesterday.Now, given that more stock promotions take place, it is very likely that additional increase in price would follow. On the other hand, the investment moves from yesterday might be considered as emotional reactions to an otherwise not so great news. In fact, the hype on the market was about a non-binding Letter of Intent about the acquisition of a project in Brazil. Whether an actual takeover would take place depends, according to the company, on the results from the upcoming on site due diligence. The fact of the matter is that only short, speculative investments in Brazil Corp. have actually paid off in the past, and there is no real sign that the situation might change.[BANNER]
A very good example similar to the situation now is the beginning of 2010. Upon good news about upcoming acquisitions, the price doubled in a matter of three months, reaching $1.14 in May. After that the acquisition was announced as completed and a steady decline in stock price began, hitting the $0.10 bottom in December. Whether this time would be different, is yet to be seen.
One more factor of interest to potential investors is the balance sheet. Although the company has projects, there is hardly any evidence in the last 10-Q report about operating expenses regarding actual mining activities. So even if this latest LOI turns into a contract for acquisition, how long would it be before actual revenues are presented to investors who support the company for longer periods and lose their money over that?
