Gold Mining USA Inc (OTCMKTS:GMUI) With a Violent Volume Spike

Why would a stock that has hardly been traded over the last year suddenly get a $700 thousand volume spike? There could be a couple of reasons: there might be a strong new balance sheet; there could be an impressive press release; and there’s also the possibility of a paid pump. So which of these three caused Gold Mining USA Inc (OTCMKTS:GMUI)’s sudden pop?

There’s no press releases. The latest announcement was made on March 27 and it concerns the acquisition of the Palmyra Gold Property located in Lyon County, Nevada. As impressive as it sounds, the PR didn’t really have that much of an effect on the market back when it was first published and we really doubt that right now, more than two months later, it’s somehow influencing investors.

We can safely rule out the financial reports as well. The statement for the first quarter of 2014 was published on March 31 and it doesn’t really look like much. Here’s a summary of the figures found in the balance sheet:

• NO cash
• prepaid expenses: $1,900
• current liabilities: $28,400
• NO revenue
• net loss: $1,200

You can see that there really is nothing to lure investors in. The fact that the total expenses for the quarter amount to just $1,200 suggest that GMUI are not even trying to get the ball rolling.

This means that yesterday’s intense trading could have only been caused by a paid promotion. And we should note that GMUI‘s performance certainly resembles that of a pumped stock.

The ticker opened the day at $1.49 (a 14% gap up), ran to an intraday high of a whopping $2.37, and then came back down. It moved sideways for a bit and finished the session at $1.04 which is 20% below Monday’s close.

Sure enough, when you do a bit of research, you’ll see that GMUI is indeed being pumped. Research Driven Investor and the rest of its affiliated newsletters launched the campaign before the opening bell and the results are pretty obvious. The fine print under the emails says that they have received $25 thousand in cash for a two day awareness campaign which suggests that we could see some more emails today and possibly, another active session for GMUI.

Whether that’ll happen or not remains to be seen, but in the meantime, we want to see who could possibly profit from the pump.

Unfortunately, the reports are not very informative on that front. The only thing that we do know for certain is that between December 31, 2013 and March 31, 2014, the convertible debt was reduced by $5,200 while the float increased by 201,100 shares. We also know that more than two months have passed since the publishing of the statement.

Whatever the reason for the promotion, yesterday’s violent swings showed us that the campaign is not going according to plan which ought to be a good enough reason for everybody to weigh the risks carefully before putting any money on the line.

Unlike GMUI, another pumped stock called Growblox Sciences Inc (OTCMKTS:GBLX) is doing relatively well. Yesterday, GBLX managed to rack up a dollar volume of more than $1.1 million and gained a respectable 16%. Medient Studios Inc (OTCMKTS:MDNT), on the other hand, crashed and incinerated 35% of its value in just six and a half hours.