USA Graphite Inc (OTC:USGT) Took a Tumble

Shareholders in one of the biggest pumps at the moment had a bad day on Thursday when USA Graphite Inc (OTC:USGT) took a 22.82% nose dive.

USGT closed at $0.69 with a volume record of 8 million shares. The pumpers, Stock Castle, blamed the crash on “shorters.”

Stock Castle and the other pumper newsletters touting USGT are saying there is a short squeeze coming, but there is no hard evidence yesterday’s performance had anything to do with short selling.

Even if there were a lot of short sales, USGT lacks the fundamentals to support the high prices, artificially inflated by the paid pumpers. When a company is touted by spam emails in addition to paid promotions, and doesn’t say a thing about it, its credibility is bound to take a hit.

Not only hasn’t USGT commented on the pump job and the spam, the company has actively aided the pump efforts, by releasing vague, optimistic press releases containing very little verifiable information.

In the case of USGT, there are also other factors like the fact that the company doesn’t have the capital needed to realize its business plan. Not to mention the issue with the legal counsel and the entity USGT claims it has bought properties from.

While a short-lived recovery is not out of the question, until USGT provides some tangible proof it can mine graphite, the current market valuation will remain much higher than what the company really has.