GG/GLG Merger -- The Birth of a Golden Goliath

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GG/GLG Merger. The recently announced merger between two of the most exciting larger cap gold companies should be beneficial to all the parties involved and give a nice boost to the industry as a whole. Although it does entail a setback for recent swing traders in GG who have been howling into the night about the 32% premium involved, while awarding swing traders who had the luck of recently buying GLG with a windfall, the merged vehicle ("NewCo") should be the most attractive option out of the 3 largest cap gold stocks (ABX and NEM being the other two) and present an excellent option for both investors and short term traders in the gold sector.

1. NewCo will have by far the lowest cash costs out of the three.

2. NewCo will be unhedged, unlike ABX.

3. NewCo will have a growing reserve base, unlike NEM.

4. NewCo's larger market cap will be attractive to institutional investors, including to funds that are significantly larger than the relatively small precious metal funds. This is why former GG CEO Robert McEwen's is unlikely to find much institutional shareholder support for his wild idea of trying to arrange for a vote on the deal on the GG side.

5. The addition of the GLG reserves will increase the proportion of Gold and Silver assets to base metal assets (let's face it--a more appropriate name for the old GG would have been Gold and Copper Corp., but that just didn't have the same cachet), which should allow NewCo to attract a higher valuation since pure precious metal plays generally enjoy higher valuations than base metal stocks.

6. Not only may NewCo become the most liquid gold stock, it may also challenge NEM as the most liquid option play, which will be a boon for gold stock option traders who are generally faced with a paucity of option liquidity beyond a small handful of names.

7. Finally, NewCo will undoubtedly overtake both ABX and NEM to become the largest capitalization gold stock after about 6 to 12 months following the merger. That is probably the reason why Robert McEwen, who has shown a keen interest and vision for gold empire building, has recently been boiling with jealousy.

Plenty to look forward to, both for investors and swing traders as far as New Co is concerned.