URU Metals (LON: URU) often appears on varied websites and information sources as one of London's biggest moving stocks. We might be tempted to have a look at trading it therefore. There are regularly - almost day by day - falls of 33%, rises of 50% and so on. If we could just crack the cycle there we could have easy money, right?
Sadly that's not so. It might be that URU is something to invest into for the long term - we'll come to that - but as a stock to be traded in and out of URU Metals is near useless. Actually, worse than useless, it's near guaranteed to lose us money if we do try to trade those price swings.
As a business URU is pretty much a holding company for a mid-70s% shareholding in ZEB Nickel, which is quoted over in the US and Canada. That, in turn, owns a prospective nickel property in Limpopo, South Africa. We've our concerns about that environment to be honest. We're unpersuaded that the local energy system could possibly supply the electricity to run a nickel mine. It's also not, at this stage, certain that there's anything there worth mining. It's all highly unknown at present. But that's fine in another sense - every mine that comes into existence does pass through this stage. As long as we are aware that every mine which doesn't come into existence also passes through this phase. Zeb has just had to release a note saying that their press releases had been a little too, well, enthusiastic. A possibly minor sin in the greater scheme of things.
URU Metals share price from London Stock Exchange
The information we need is up at the top there. The Bid/Offer is 100 to 200. That is, if we want to buy URU shares we pay £2 each, if we sell we get back £1. That means that we require a 50% price move just to cover the costs of dealing. It also tells us that the large price moves we see reported on the varied tickers aren't, really, price moves. It's just trades being reported. If someone sells then the last reported trade will be at £1 (or perhaps better, the broker might offer better prices on actually trades than their quotes). If someone buys then the last reported trade is at £2. Which gives us that ability for the reported price to swing wildly while the actual - or even mid- - price doesn't move at all.
It is entirely possible that URU Metals is a just excellent share to invest into - to hold for long periods of time. We doubt it ourselves but we're not about to be categoric on that point. However, the URU spread is such that there's absolutely no point at all in trying to trade the share - move in and out of it to try to capitalise on short term price movements.
So, given that there's no point in trying to trade URU Metals our advice is not to trade URU Metals.