“Look around the table. If you don’t see a sucker, get up, because you’re the sucker” – Amarillo Slim
Dreams of Gold vs Reality of Share Prices
Seabridge’s explicitly advertised and promoted investment premise is that it is a “call option” on the future price of gold. Citron believes this premise is utterly false.
Aside from all the background noise about stock promotions, Seabridge investors invest in the stock because they hope it will rise in value as the price of gold rises. As the company has told them, it is a levered play on gold.
But the price of Seabridge stock is not tied to the price of gold, it is tied only to the supply and demand for Seabridge shares. That places shareholder returns squarely dependent not upon the price of gold, but upon the actions of management and insiders. This is precisely why the past activities of Seabridge’s insiders are so troubling. However, the proof is in the pricing. Read more