Are Michael Vick and Other Celebrities Involved with a Pump and Dump?
Mike Vick is a clown. There, I said it. I always supported the athlete, despite the dog-fighting debacle that he involved himself in, because of his raw talent. I was glad to see that he signed with the Philadelphia Eagles after being rejected by the Atlanta Falcons and consequently filed Chapter 11 bankruptcy. One thing I despise, however, and cannot respect anyone for, is a blatant pump-and-dump operation. It is sad to see that Mike Vick recently abetted a pretty obvious pump-up newsletter via his twitter account.
It seems that a pump-and-dump scheme, revolving around the prospects of profiting from gold, is spreading across the Internet. Various Twitter profiles, including those of Jose Canseco, DJ Nice, and the Minnesota Breweries Company, are pumping up Sagebrush Gold (OTC: SAGE) with this video.
Pump-and-dumps are all too common, and sucker in the most innocent investors. Luring “mom and pop” investors with luring words and promises of riches is despicable, and should be a punishable offense in a court of law.
If you come across the newsletter that people are linking to, do not be lured by the promises of 2,000% returns. Several things are fishy about this newsletter, as has already been noted by other writers following this story. First of all, it claims that a single geologist discovered a substantial amount of gold. I find it highly unlikely that one single person happened to be digging around when, one day, he found 15 million ounces of gold in the ground. That's right, the newsletter claims that Sagebrush Gold recently came across 15 million ounces of gold. Gold is trading between $1600 and $1700 an ounce, but assuming a price of $1600, Sagebrush purportedly acquired $24 billion in pure gold.
This accidental discovery is approximately 12,000 times the amount of the company's cash on hand. Another premise that the newsletter assumes is that gold will reach $3,000 within 18 months. Savvy investors probably laugh at this assumption, given that many commodity investors believe that metals are oversold. This is why metals are moving lower, in tandem with equities.
If you got excited when you saw Mike Vick's tweet, don't be. Vick should have exercised more caution in pumping up a blatantly predatory newsletter. One can only hope that the football star does not own any shares in the company; otherwise, he could end up back in jail.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.