Jayne's tip drives the gravy train

FIVE trading days ago someone who goes by the nickname of Jayne delivered a spectacular tip to one of the internet forums dedicated to Australian stocks and their fast-moving day traders.

FIVE trading days ago someone who goes by the nickname of Jayne delivered a spectacular tip to one of the internet forums dedicated to Australian stocks and their fast-moving day traders.

Her brief post on www.crazyjimsmith.com shortly after the market opened on December 28 stated: "I did some research last night on Goldsearch Ltd and feel that it's worth a look at. It's up over 8 per cent this morning and is currently drilling for uranium 6km away from the old Mary Kathleen uranium mine."

When the day traders and stickybeaks saw Jayne's post, Goldsearch - the newest darling of the booming uranium exploration sector - was just under 5c a share. The options were under 2c - and Jayne claimed to have bought 200,000, which would have cost almost $4000. Twenty minutes later when Jayne made another contribution to the forum, Goldsearch shares and options were lifting off on high volume. "Anyone else getting on board?" Jayne wrote.

"The program is targeting uranium mineralisation at the historic Elaine Dorothy prospect and at the recently identified McGregor target."

Goldsearch had started to rocket, attracting the hundreds of day traders who browse a handful of internet sites. News of Jayne's prescient post that morning was spreading like wildfire.

Some traders expressed scepticism, suspecting blatant ramping or a pump-and-dump, while others scrambled to get on board.

"I hope your information is good Jayne because I just followed you!" wrote Crazy Jim Smith.

Jayne replied: "All my info is provided in good faith after hours of countless research. In this market, uranium is still the flavour of the month and that is the main reason for me to buy. Welcome aboard the GSE train."

Before lunch, Crazy Jim Smith was seeing a significant profit on his own investment. He was getting "premonitions" of $1. But minutes later, Jayne was jumping.

"Just advising that I've just sold my options for a 100 per cent profit. I still think they can go higher, perhaps much higher, but a 100 per cent profit is good enough for me," Jayne wrote.

By the end of the trading day with Goldsearch closing up 150 per cent on turnover of almost 7 million shares, Jayne had been elevated to legendary status.

After some profit-taking on December 29, then a break for the weekend and New Year's Day, the shares continued their extraordinary run on the first trading day of 2007 with an intra-day high of 21c on a massive 54 million turnover, before closing at 18.5c. Any day traders who had bought the options at their lows on December 28 and sold at their highs on January 2 would have reaped a profit of almost 1000 per cent. For Jayne, it could have meant turning $4000 into $40,000. Goldsearch closed at 14.5c yesterday, down half a cent. "What's happening is amazing. After starting this thread, I didn't expect to see such a big reaction. It goes to show, do your homework," Jayne wrote. While Goldsearch's management has sounded a note of warning and insisted that the directors are not aware of any news that could be influencing the interest in the company's shares, some of the day traders suspect something has leaked. For making a profit of 100 per cent in less than two hours, Jayne has been receiving commiserations.

Disclosure: The author has an indirect interest in Goldsearch shares bought for 9c.