Month: June 2012

IMG , IAMgold update

Hamilton

img june 2012

On an arithmetic scale at least, our target of $9.60 or so was pretty good. That was based on an A-B-C where C equals A. Assuming the top was in Nov. it is also possible to count the downward move as 5 waves with an extended 5th wave. Both scenarios would allow for a pop back to the $17/$18 high point of the triangle B or 4th wave. That seems to be a bit high but the speed at which the gold stocks are going back up is quite impressive ( look at G and BRK). The move up from the lows seems to have traced out 5 minor waves, promising more to come. In the big picture people are now once again absolutely sure that QE3 , 4 and 5 are still to come but gold itself may still be doing a 1-2, 1-2. Only a clear break above $1650 would negate that possibility. It is hard to tell but the outcome is not as obvious as the market would have you think.

gld june 2012

CuOro, CUA.V

Hamilton

CUA.V apr 2012cua.v june 2012

The small chart (see prev. blog) suggested an initial downside target of about $0.80, on the basis of that being a 4th wave of previous degree, perhaps. As it happens that is exactly where the decline stopped but longer term there could be more to go. What we may have had was an a-b-c X a-b-c, in which case the correction may indeed be over. However ,  the larger simple A-B-C may still be operational (in red) in which case the stock could drop a ways further. What did happen is that the gap to the upside was closed. Our remarks concerning the incentives on the part of management having diminished substantially, remain valid. In fact, apart from their own options being underwater, they are in the process of making an agreement with Pacific Road (Sydney , Australia) that among other things calls for the sale of about 20% of the company by way of stock and warrants over the next 5 years. This transaction would be done in two separate parts and might provide as much as $45 mln. to finance the development. How this relates to Hudbay Minerals and their non-dilution agreement is not immediately clear. Their stock dropped from $30 to $7 over the past 4/5 years and they recently cancelled a $400 mln. financing. Even so , in that context $40 mln.  is rather miniscule so why did they not step up to the plate? Too many questions therefore use a tight stop! The deal with the Australians requires stock holder approval, management has about 35% and HBM 14 %, so that should not be a problem.

FVI, Fortuna Silver

Hamilton

fvi jun 2012

A little early (at $3.79) we thought this might be a buy with a target of about $5.30 (where it would close a gap). That target remains even if the stock slid a little lower. From $7.50 there is a clear 5 waves down. What is not clear is whether this is a C-wave as part of an (irregular) flat correction, in which case we are on our way up, or simple a first wave down after a “thrust” from a nine month long triangle (see previous blogs) In that event there is a lot more downside so we would exit at about $5 and/or use a tight stop. This stock is a good example how the juniors have traded the last little while.