Question for Everyone & Anyone

[tomexxtra]

If you were to add more shares to you portfolio, would you buy
DROOY or AEM. Both of these look more like buys to me than any other of my PM stocks:

HL, CDE, GSS, KGC, SLGLF, CUSIF, GLG, GG, PAAS, HMY, GFI, VGZ, SWC, SMXMF,

I thought of adding to my position one more time before
the big jump starts at the end of this month.

Tom Exxtra

everyone needs some Exxtra GOLD

[FoundingFathers]

TomExxtra,

Of the two you mentioned, Drooy looks the best from a technical standpoint, but others look better.

AEM was just starting to improve technically untill this week's disaster which sent the stock breaking all kinds of support levels. AEM as a value play - maybe - but I've completely lost confidence in their management team. It seems that this has become a "show me" stock, IOW, investors will likely wait at least until next quarter's result before committing to it.

Right now I have WHT, and VGZ at the top of my list.


Good luck!

[Scorpio]

Agreed FF, you have chosen a couple of good ones. I have heard comments about VGZ that it is the gold market equivalent of SSRI, or compiling assets before the bull picks up steam. VGZ hasn't necessarily participated to the level expected in the recent moves in Jr's. I can see your point how it is just a question of time before it does a little catch up action. They need more good news to light a fire.

As for Durban, poor little 'ole Durban. This is a stock that no matter how hard it tries, it cannot get out of the way of circumstances. Over the years there have been more trials and tribulations with this stock than any other I can think of. Having said that, they do have 9M ounces of reserves, even if it is deep underground. It ain't like they are paying huge union wages, so there is an offset there. How many times have you seen a stock that seems like it is going to zero because of all of the bad news. I have been out for awhile making fiat in others while this one settles out.

I was going to bring this one up again anyway, so when tomexxtra asked about it, it confirmed that it is time.

I believe the bad news has about wrung itself out on this stock. I still like the mgt team. They have just had an incredible amount of tough issues to deal with. Harmony Gold chart doesn't look a hell of a lot better, and I believe the consensus is that Harmony is a fine company. Anyway, Durban is now undervalued to Harmony from a historical spread basis. This one just needs a little good fortune for once, and it will go on a very nice run. This is evidenced by the increase in volumes lately. There are a vast number of shares sold short that will add impetus to any upmove.

To me, coverage in a gold bull market has to include some Durban. The risk reward from these levels is minimal as far as I am concerned. They are still producing 800-1M oz a year. The final tally will depend on the cutbacks in production waiting for better Rand gold prices. The Rand increase has killed SA stocks. This is a proven producer, while many of the Jr's enjoying significant runs as of late are nothing but pie in the sky dreams that will never turn an ounce.

As for the chart, it is very ugly. You could either buy now, or wait for a pullback to the blue uptrend line at about 2.60 and try it from there. It all depends on your convictions. It is basically in a decent support zone right now. A pullback in gold physical or some other significant bad news must hit for this one to get creamed again. Last time I talked like this, it was at about 2.25, and now it has been holding these levels, so the profits still accumulate in this one if you pick your spots. Just don't be scared to pull profits as the market requires, on any decent rises.

I think any portfolio will do fine holding this one as needed over time. A nice balance of producers like GG, NEM, HMY, Drooy, coupled with stong positions in quality Jr's will give you max gains throughout this bull market. When the producers are taking a break, some of the Jr's are still popping, and vs.

Anyway, here is the chart.

[Scorpio]

I am not a huge follower, and I agree with FF on this one, of AEM.

They were catching a pretty good bid for awhile until the masacre of late last week, so they must have been pumped for some reason, and when the truth was brought forward, down she comes. For a $13 stock to drop $3 in a day, that is abnormal. The market was very displeased with whatever was cooking. I haven't looked for a reason as I am not a believer and am not really interested.

What is interesting is how this proves the 'walking of the plank' syndrome with many stocks, no matter what sector it is from. When it is found out that the 'Emperor has no clothes' with a stock, you had better be decisive and quick to move if you are caught in one of these.

Last year Silverado got bombed back to the stoneage due to various reasons, chiefly being a detrimental article by a certain Fla reporter. I was in that one and reacted swiftly, yet was not able to protect all gains and capital. It happens.

That's my take..........

S

[FoundingFathers]

Scorpio - Great analysis!

[fvk]

I wouldn't touch drooy with a ten foot pole. They are a soap opera. Their news is never good. All their surprises are bad. If you could even call them surprises at this point, as they have become a regular feature of the drooy landscape. Lawsuits, breakins, labor disputes, currency issues, bizarre contradictory statements from management. They don't pay a dividend because they don't make any money. With the current dollar/rand trend most likely they aren't going to make any money anytime soon. Frankly they just piss me off. This of course does not mean that their share price can't go up, but in my opinion, if it does go up it will be because they are being dragged along by a general uptrend in the precious metals sector, and you could find better performers easily.

Of course, AEM also seems to be a basket case. But I never get the impression that aem is lying to me. I can't say the same for drooy.

I know the party line is that when gold goes to the moon suddenly drooy will become profitable, and then you will have all this leverage because they are so marginal now. But with the rand gold price stagnant at best, this is not a sure thing. The dollar price of gold can go up and drooy can still go under.

All of this is merely my opinion, so please nobody sue me.

- fvk

[Scorpio]

@fvk,

Man how I know those arguments, and I have no problem at all with your shot at Drooy. It is only logical that investors, even astute, would stay away from this one because of the issues.

Yes, we have all heard the talk about the leverage to increasing gold and so on that Durban presents, but as you say, the risk/reward is much higher on this one. The political risks here are very real.

Having said that, I still stand by what I said. The Rand is NOT going to parity with the dollar. It has already approached very significant highs against the buck, and appears to be topping. This will only help SA's going forward, especially if there is a devaluation of the Rand. I attribute much of the recent heartbreak in Drooy to the Rand increase. That too will eventually turn.

I'm not saying put all your eggs in this basket, I am only saying that in a roaring gold market, take an egg out of their basket and hold it. You will be rewarded.

S

[xzorro]

If you were to add more shares to you portfolio, would you buy
DROOY or AEM. Both of these look more like buys to me than any other of my PM stocks:

HL, CDE, GSS, KGC, SLGLF, CUSIF, GLG, GG, PAAS, HMY, GFI, VGZ, SWC, SMXMF,

I thought of adding to my position one more time before
the big jump starts at the end of this month.

Tom Exxtra

everyone needs some Exxtra GOLD
Hi ! Am basing my decisions mainly on TA.

DROOY is forming a bearish LT Descending Triangle. Am afraid that this could mean falling thru support.

AEM has dropped to lower part of trading range. Is not making any money...

Have bought this week again KGC Kinross Gold which is in bullish Ascending Triangle (since spring 2002), and could break out any time.
Have also bought WHT Wheaton which has broken out this week.

Am also fairly confident about GG and BGO. However, would only add this after pullback.

BR

[Scorpio]

Thanks xzorro,

and welcome aboard, always good to see different opinions.

I will add though, that I am not a fan of triangles and wedges as they are notoriously unreliable.

See Ya,
S

[xzorro]

Hi Scorpio ! Thx for yr reaction.

Let me make a note regarding the reliability of triangles. Basically the reliability depends on where it is in the chart formation.
An Ascending Triangle is as such bullish. However, an AscTri in a downtrend that is tricky, but an AscTriangle in UPtrend (=KGC) is certainly bullish.

When I verify this with the Encyclopedia of Chart Patterns (Bulkowski), then he writes:
"the ascending triangle is one of my favorite chart patterns....". Bulkowski notes a failure rate of 32 %, and of only 2 % if waited for upside breakout.

Hence, also for me the pattern for KGC looks promising.

BR

[G-khan]

Hi Scorpio ! Thx for yr reaction.

Let me make a note regarding the reliability of triangles. Basically the reliability depends on where it is in the chart formation.
An Ascending Triangle is as such bullish. However, an AscTri in a downtrend that is tricky, but an AscTriangle in UPtrend (=KGC) is certainly bullish.

When I verify this with the Encyclopedia of Chart Patterns (Bulkowski), then he writes:
"the ascending triangle is one of my favorite chart patterns....". Bulkowski notes a failure rate of 32 %, and of only 2 % if waited for upside breakout.

Hence, also for me the pattern for KGC looks promising.

BR
Welcome to GIM - it seems you know some TA too great! I sometimes get more out of reading the discussions of two TA people going over the charts than from any other sources..

Glad you found us...............

Thanks

[tomexxtra]

Thank you for all your responses.
I ended up buying some more of DROOY & VGZ [even split]
I left AEM out.
Thanks again,
TomExxtra

[Libertarian_Guard]

S.A. Au stocks will undoubtedly shine again, but right now they are so far out of flavor that I have to look elsewhere for appreciable miners.

NEM GG GLG BGO SRLM CDE ......and ORZRF

[xzorro]

Thanks xzorro,

and welcome aboard, always good to see different opinions.

I will add though, that I am not a fan of triangles and wedges as they are notoriously unreliable.

See Ya,
S

Hi Scorpio ! At this stage no BO from Kinross, Q3 disappointing. So, IMO it looks like the price will go to test support ~7.
Like I said in another thread yesterday the HUI looks somewhat extended and a pullback to the trendline is likely to occur. Not yet a good time for buying HUI stocks, just wait till the test of trendline.

BTW Happy to see that stocks like NEM are not so much affected.

BR