Category Archives: Technical Analysis

Weekend Charting 5 Oct 2014 – NST, DRM, TGZ

Gold and silver price (USD) continue to have a terrible time. Time for an update:

Gold (USD)

Gold currently sitting on a significant support line at $1190. The last two occasions the price hit this area in June 2013 and Dec 2013, the price rebounded back to $1250 in a matter of a few weeks (and then onto $1420). Should $1190 fail, then I’d expect at least $1065 to be hit.
XAUUSDO_scottreevecom_6oct2014

Silver (USD)

Silver recently broke support at $18.62 and hit below $16.92 support. Silver last consolidated strongly between these two levels between Sep 2009 – Aug 2010 and between Feb and Aug 2008, so there may be a bottom at current levels and some more sideways action? If not, then I’d expect at least $14.65 to hit next support level – a major support level that goes back to April 2006.
XAGUSDO_scottreevecom_6oct2014

NST (Weekly):

NST has some buying support in the $1.20s. Should this area fail, a test of $1.09 is likely. Next couple of days will determine next direction (see short term candlesticks with wedge formed).
NST_scottreevecom_5oct2014

Close up of Daily candlestick chart:
NST_daily_scottreevecom_5oct2014

DRM (Weekly)

DRM now fallen 11 of last 12 weeks, breaking some key support lines. Technically the only real potential support area on the chart is around 40 cents when DRM last hit the area in June 2013. Hard to see on my small chart, but the last two weeks have shown some “tails” to the weekly candles indicating current buying support below 50 cents.
DRM_scottreevecom_4oct2014

TGZ (Weekly)

TGZ is a fairly illiquid gold stock. Nonetheless, weekly candlesticks create a more clear view on the areas of resistance and support. The 80 cent region has been a dominant area of resistance, whereas 55 cent has been a strong support level, and the place to watch if the current trending support line is broken.
TGZ_scottreevecom_4oct2014

Cheers
Scott

Gold Shares Bloodbath

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  • UPDATE: Post now includes charts for NCM, OGC, PIR, TGZ (as of 10 June 2013)
    =======================
    On Friday 12 April 2013, the US dollar gold price plummeted 5.6 per cent and silver fell 6.0 per cent. At time of writing on 15 April, both continue to slide with gold price in Australian dollars at A$1340 and silver at A$22. Major support lines have now been broken and the heavy falls are likely going to continue for a while yet.

    The bloodbath on the ASX today can be seen in the watch list below:

    gold_asx_15.04.2013

    As is clear above, the one gold major on the ASX, Newcrest Mining fell over 8 per cent in the session. Even the low cost producers got smashed as much as the marginal gold producers… (more on that later)

    As I posted at the end of 2012, Newcrest (and gold shares generally) have been underperforming for over two years now.
    ncm_2013_shoker_goldmarketscentral

    With today’s losses, NCM is currently down 20.8 per cent for 2013.

    In all seriousness who would want to touch gold and silver right now?

    I don’t blame anyone if they are leaving the gold or silver markets right now. Like trading anything, it’s all in the timing and the charts are showing that both gold and silver price will get cheaper (unless there is a major bounce in the next couple of days…unlikely).

    Gold and silver’s fundamentals today are better than they have been for decades. Yet again there is now a large disconnect between what’s happening in the physical market and what the gold price and gold shares are indicating. We have tens of thousands of paper gold and silver contracts flooding the market, yet we have the likes of central banks trying to repatriate their gold reserves, but being told the gold likely doesn’t exist yet. Take the German Bundesbank being told it would take 7 years for nearly 700 tonnes of its gold bullion reserves to be flown back to der Fatherland from Paris and New York (yet this amount of gold could fit on a couple of airliners tomorrow if the gold existed…).

    Most years since the gold/silver secular bull market started 12 years ago, gold and silver always had at least one savage sell off each year. This is why many investors always warn about investing in gold/silver with leverage – it’s easy to get caught out. See this chart I did back in Sept 2011, which shows these severe pull backs. This current sell off is just another example of volatility in gold and silver markets. In the past these sell off periods have all been fantastic buying opportunities. In a debt laden Western World, in a world where Japan is destroying its currency, and China has printed more credit than the entire US financial system since 2009 …. then I’m pretty confident to say that gold and silver will remain being a desired currency to store wealth and maintain purchasing power.

    Back in 2008, the gold price fell 34% from peak to trough before returning to its bull market
    . Silver when from around US$20 to about US$7.50 – when I first became awake to gold and silver’s fundamentals.

    By the time Lehmann Brothers went under, and like.. half the world’s financial industry on 15 September 2008, gold and silver had already been falling for 6-7 months and bottomed soon after the GFC panic started in that September. Perhaps gold and silver is yet again being a leading indicator of things to come later this year?

    The best part about the current sell off is that the lowest cost producers, which high-grade gold near surface are getting sold off just as heavily as the marginal gold stocks. When the dust settles, there will be some big bargains.

    In my opinion (no buy recommendations or advise here… just my opinion), these are some of the gold stocks worth watching. Who knows when they will bottom.

    (Click to enlarge)
    scottreeve_gold_stocks_april2013
    Disclosure: I currently have a small parcel in TGZ.

    My observations are based on gold resource, production, cost… the “economics”. Political/management risks can change the desirable attributes of these stocks rather quickly!
    I would also say that there are few gold stocks in Australia worth touching these days because the cost structure is getting out of control. The last few years there have been too many mid-tier and major gold companies that have put $100s millions into growth and expansion, and are paying for it in their cost structure. Now is the time to find the best of the best in terms of high-grade gold and low cost. Right now South America looks good and as always gold deposits that are very high grade and shallow to get to!.

    ** Important note: Not all gold companies report complete total cash costs. Some companies excludes taxes, exploration, depreciation, depletion expenses, financing etc from their calculation. This can make it difficult to compare companies cost structure – the difference can be large. For example, in January 2013, one Australian analyst found that

    “the average total production cost was $1,170 an ounce, compared with an average reported cash cost of $773 an ounce.”


    Quick background on these companies mentioned above:

    Two weeks ago I charted BDR and DRM and their support lines are clear to see. In the coming days I will update this post with technical analysis of the other stocks. They will also be posted at www.goldmarketscentral.com

    Newcrest Mining
    Newcrest is on my list as it is the only gold major on the ASX. NCM has had consecutive years of underperforming, but when the gold market bottoms, NCM should bounce. Following the stockmarket lows in 2008 NCM rebounded around 90 percent in 6 months (from $21 to $40 p/share). Yes, dogs can turn into market darlings quickly. I suspect one day soon NCM will resolve its expansion issues at Lihir and Cadia and solid returns should result.

    NCM_scottreevecom_10june2013

    Oceanagold
    The Didipio Mine (Philippines) is estimated to be one of the lower cost gold mines (net of by-product credits) globally. Didipio Mine estimated cash costs of FY2013 at negative $370 to negative $50 per ounce, due to net by-product credits from 15,000 – 18,000 tonnes of copper.

    OGC_scottreevecom_10june2013

    Beadell Resources
    Beadell has just commissioned a new gold mine in northern Brazil. One of the starter pits has arguably the highest grade gold deposits in the world with grades at 30.9g/t au (almost 100,000 ounces). Another start pit contains veins of iron ore between the veins of gold bearing ore. BDR is soon to commission an iron ore concenerate plant to sell it as a by-product. This will lower BDR’s total cash cost to the lowest quartile of around US$425 per ounce.

    BDR_scottreeve.com_31.03.2013

    Papillon Resources
    Papillon raised $52.9 million in March 2013 to complete a 100,000 metre drilling program at its project in western Mali. The company already has over 4 million ounces resource from shallow drilling completed to date. There is potential for many millions of ounces to be defined in the coming months.

    PIR_scottreevecom_10june2013

    Teranga Gold
    Teranga has a proven gold mine in eastern Senegal. The company made significant inroads in 2012 by reducing its operating costs by expanding its plant; found a new gold deposit nearby (at grades of 5.3/gt au), and will soon eliminate its hedge book in the coming months.

    tgz_ax_price_weekly.10dec10_to_25jul13

    Doray Mining
    Currently developing one of the highest grade gold projects in Australia at Andy Well. The main pit at Andy Well has a resource grade of 15.1g/t au. First gold production is expected in September 2013 at an annual rate of 74,000 oz per annum. Total cash costs expected to be around A$868 per ounce.

    DRM_scottreeve.com_31.03.2013

    Cheers
    ~ Scott

  • Stocks and Precious Metals at opposite turning points?

    I feel we are at a major turning point for the major world sharemarkets and full gold and silver. Below is my interpretation of the chart technicals.

    S&P500

    Australian All Ords

    AUD/USD

    AUD/EUR

    Gold (US$)

    Silver (US$)

    Cheers
    Scott

    Technical Analysis – 30 January 2012 – TRY, KCN, DLS

    Three charts this week.

    Technical Analysis – 11 December 2011 – NCM, IAU, PRU, BDR

    All_Ords_2011_monthly_candle_chart

    Weekend charting 11 December 2011

    Scott

    Technical Analysis – 7 November 2010 – NCM, RSG, PRU, MDL, DRM

    pru_chart_7.11.2010

    Welcome to Technical Analysis (TA) session for the weekend of 7 November 2010.

    Five different gold stocks this week. The major, 3 with a presence in west Africa, and a newly listed minnow.

  • NCM – Newcrest Mining

    Newcrest Mining Chart 7 November 2010

    TA Commentary:

    NCM looking even stronger with the recent acquisition of Lihir Gold. Recent breakout of $39.25 resistance area is very significant. Shareprice recently tested this and is now looking to make new highs.

    Fundamentals snapshot:
    Positives:
    * top 5 global gold producer
    * low cost producer
    * next to no debt

    Negatives:
    * few overall negatives – more mature share price (less explosive share-price compared to speculative stocks)

  • RSG – Resolute Mining

    Resolute Mining Chart 7 November 2010

    TA Commentary:

    RSG’s shareprice shooting up recently riding the price of gold wave. Short term technicals look positive, but next few days should confirm whether this has more left in it or if its a false setup.

    Fundamentals snapshot:
    Positives:
    * producer from 3 mines
    * fairly high cost producer, however high gold price means greater relative profit return.

    Negatives:
    * foreign risk
    * some debt
    * disappointed market in the past

  • PRU – Perseus Mining

    Perseus Mining Chart 7 November 2010

    TA Commentary:

    PRU had a nice gap on Friday with strong volume. MACD histogram indicates SP could run a bit over next few days. Long term trend intact.

    Fundamentals snapshot:
    Positives:
    * two large new mines (200koz each) on the horizon

    Negatives:
    * in development phase, yet to produce

  • MDL – Mineral Deposits

    Mineral Deposits Chart 7 November 2010

    TA Commentary:

    MDL currently having a good run since breaking out on 23 August 2010. A few early breakaway gaps confirmed the bull trend has momentum. $1.50 possible in the short run if it can move and stay about $1.25.

    Fundamentals snapshot:
    Positives:
    * one significant gold mine operating in Senegal.
    * Proven track record

    Negatives:
    * stock has been largely unnoticed after gold mine developed

  • DRM – Doray Minerals

    Doray Minerals Chart 7 November 2010

    TA Commentary:

    DRM listed earlier this year and got off to a flying start. Drilling Andy Well Project in Western Australia and continues to find good gold grades. Even though its shareprice has gone from 20c to high of $1.65, its market cap remains around $40 million. Plenty of upside with more drilling to come.

    Fundamentals snapshot:
    Positives:
    * small market cap
    * plenty of upside potential

    Negatives:
    * very speculative stock
    * very low liquidity
    * company a couple of years away from production

    Please feel free to add any comments.

    ~ Scott