Sunday, July 15, 2018

Trading Opportunities in the Gold Sector



Some of the best trading opportunities come from the mining sector. This is mainly due to the cyclical nature of the business. I always keep a small watchlist of beaten down stocks waiting for them to rise up from their bottoms and show me a breakout.

One of my main criteria before I commit to the trade is it must be trading at least 50% below it's previous 52 week high. Volume must be above 50,000 and the stock trades on the big board. I also never buy more than 10% of the trading volume. That has never been a problem in the past.

So far this cycle I have successfully traded WDO for a 30% gain. Take what you can get but 30% is still substantial. Looking back on my April trades I sold FR, EDR and FVI way way too early. All those positions are now approaching 50% gains from where I sold them.

We all have our coulda, woulda, shoulda stories so those are mine. There are always trading opportunities but you have to be patient and live through a few ups and downs. Just keep watching for volume and if interest is drying up. This is usually a signal to sell your position. 

Osisko Mining closed @ $2.14 Friday, 52 week high/low = $1.61/$5.07

Eldorado Gold closed @ $1.42 Friday, 52 week high/low = $1.04/$3.22

I believe both these gold stocks are worth a look and in the days ahead a buy. Look at the risk profile they represent. Just slightly off their lows and a long way from their 52 week highs. They could double from here and still not hit highs for the year.

These are the type of stocks I look for with tremendous upside potential and low risk to the downside. 

Could an investment in either one lose money? Absolutely. How low might it go if I'm wrong? NEVER allow yourself to lose more than 15-20% max is my loss rule.

When should I sell if it goes up and I'm making money? As long as volume and price are both rising proving that there is strong relative strength, then hold.

I would be happy with a 20-25% gain in either position and would then look to exit.

SELL ELD if it drops to $1.20 and if it rises to $1.70

SELL OSK if it drops to $1.81 and if it rises to $2.56


Other Notable Gold Stocks to Watch

AKG, AGI, DGC and TXG

They don't represent as much upside potential but are worth adding to on further weakness in the sector. I think September could be, might be a breakout month for some of these stocks.

I hope you have some trading ideas after reading this and if nothing else some more stocks to research and hopefully make money on.


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2 comments:

  1. I don't know what gold is trading at right now, but I do think everyone should have some investment in gold. It's a safe bet as I feel the stock market is ready for turn... The bears are coming!

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    1. Yes Dinh, there is a lot of tension out there right now, you can feel it. Will this vault gold stocks higher? I don't know but a little money invested here should do OK. The stocks I mentioned are looking for a reason to breakout. Thanks for swinging by:)

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