We were perhaps a little early in our previous blog. With the benefit of that hindsight it now looks like a reasonable buy at these levels or 50 cents lower. This is a viable gold miner operating in Ontario. It is one of the largest new mines with relatively low production costs. Coming from $40 a buy at $5 would certainly satisfy the “buy low, sell high” mantra.
From 400 to 12 is impressive. Nice five waves too. You risk loosing much of your money, but then if it works you could be at 110 in no time. Not for the faint of heart. Leveraged 3x. Give it a shot with a little part of your money.
Royal Dutch (the ADRs) and Chevron are about the same in size at roughly 225 bln. As you can see, we hope, Royal has followed the price of crude oil quite accurately whereas the Chevron guys have chosen to ignore the fundamentals almost entirely. Whether or not the various counts in these charts is correct is not all that important, but we do expect oil to drop back to the $40 level or so sometime in the future. The triangle, if there is one, would suggest that oil might actually go up, but the B-wave looks pretty compelling. In any event the extraordinary spread between the two integrated companies is, in our opinion, about to collapse. The spread now at about 100% since 2006 is probable as good as it gets. Sell one Chevron against a buy of two shares of Royal. Given the higher dividend on the Royal (by almost 2%) you actually will have a positive carry.
Then (July 2012) and now charts;
Even if bought at $4 or so (should be much lower in reality) you can sell now with a profit of 30%+. We would do so given the clean triangle the stock made recently. It should fall back to $4.34 before going higher. We remain constructive on the stock for the time being but there simple is no point in carrying it through the next valley.