Sunday, January 19, 2014

Gold miners: a bit of thinking, a lot of charts

OK, I'm in the unenviable position of having owned a first-mover in the gold miners breakout.

Congrats to Rick Rule or whoever it was who bought all the Rio he could in December at sub-$1.60. Personally, I bought much of mine (I've looked up these prices) at $1.69-$1.75 at the break above the SMA(50), then added around $1.80 and $2.00. I've spent the past two days selling on the way up, especially Friday morning as RIO went way over +3SD and more than 50% above its SMA(50).

I don't get how you can change this equity's price by >80% while gold has basically stayed put, whether they've seen improved production or improved costs or whatever. Maybe it can still get to $3 in this surge, especially considering how badly it was sold off all through fall (especially in Lima). But I'm going to want to watch volume.

What a dumbass, you say! Why sell RIO? Dumbass! Well, because I wanted to transfer yet more money into BTO:

Congrats to Rick Rule or whoever was gobbling up BTO at sub-$2.20, but I bought my first tranche at $2.22 on the EMA(16) retest, added at $2.35 or so on the pennant break, and have since added more with the money I got from selling some Rio on Friday morning (good timing, that). I figured the Volta deal was delaying B2's rise, and it turns out that might have been it.

So now I'm in the unenviable position of also owning the second-mover. I'm not as worried about a BTO pullback as I am about a RIO pullback, since BTO's volume hasn't assploded and its RSI is still reasonable (for a breakout chart). Plus, Clive Johnson is still a god among men.

In fact, let's spend a few seconds worshipping Clive Johnson:

You are handsome and wise, O Clive, and well-aligned with shareholders' interests.


I want to keep BTO and RIO til they've finished moving, but I'm also wondering: can buy a third-mover? After all, I want to make up for last year's losses quickly, and compounding wins really does it for you.

I'm doing this under the assumption that gold still goes up from here, btw. At least over the next week. And that doesn't bode so well for BTO as for crappy miners, since B2's mining costs are pretty low to begin with. Then again, it does have a fuckton of ounces in the ground that are not yet under production.

So who to buy next?

Here's a couple charts that are interesting when taken together:

GDXJ has seen the higher volume. That's sad because it's full of bullshit companies. It's almost as if the goldbugs have gotten the jump on Wall Street. Unfortunately, GDXJ buyers have bought companies that are still worth as close to nothing as they were last month.

I'm also not going to buy an exploreco. And I'm not going to buy a development property.

So, if I assume there's more breakout potential in the seniors (especially with Josh Brown and everyone else suddenly hopping on the goldbug bandwagon), is there maybe a good senior miner that I can buy? Obviously their problems haven't gone away, but maybe there are some worth buying.

How about Goldcorp? They don't suck, do they? They've never really sucked.

Well, it's bottomed, it seems about a week behind RIO, but the problem to me is that there doesn't seem like a lot of immediate upside.

How about YoMama? I've always liked YoMama. YoMama's given me some good times before.

Well, it's certainly strong. But again, unless I'm expecting a rebound to the August high, it doesn't look to have a lot of upside. I may as well keep owning B2 and RIO.

Maybe the problem is I'm only considering seniors that quite demonstrably don't suck?

Maybe I need to find a senior that everyone hates, but which isn't necessarily a pile of shit.

How about Fire Steve Letwin Mining?

It's only just this week broken above its SMA(50), there's no big volume surge yet, it's not overheated by RSI, retaking just the October high (where BTO is today) would mean a 30% gain over today, and retaking the September high (where RIO is today) would mean a 40% win.

And is still up and running.

I don't know any of the fundies on I!Am!Gold!. Haven't been following it. But frankly, if they aren't haemorrhaging money, then I could see good upside as people decide they don't hate Steve Letwin so much.

Then again,

As far as I recall DPM is a lot closer to mining at break-even, nobody's ever liked DPM*, their properties are all fucking garbage*, their investor presentations are tedious*, their CEO moonlights as a general anaesthetic*, and they're only 50% above their low.

* - note that I do like DPM; I think they're a great, professionally-run company. But I like them the way I like a rusted-out 1992 Toyota Camry.

And if today's DPM market is anything like 2011's DPM market, their trade is still ruled by bots. Meaning this thing could move faster on lower volume. And I'd get to screw over the bots.

Then again, if we're about to see an inflow of Wall Street money, higgledy-piggledy into the miner space via idiotic purchase of ETFs with no discretion whatsoever, maybe it's smarter to just buy HGU.TO or NUGT?

I have no idea. I'll have to sleep on it.

Please note: I'm not suggesting buying any of these stocks, and for all I know I might just stick with B2 and Rio. Or I might sell half of my and allocate more money to miners. I'm just trying to puzzle out what to do next with my happy January winnings. Where is the third mover for my portfolio?

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