A couple stock charts that Doc sees opportunity in
Doc joins me today to share two stocks that he thinks are in a nice set up to move higher on the back of rising gold and silver prices. We start with Avino Silver and Gold Mines (ASM.TO) on a monthly and weekly basis. Then move over to Alio Gold (ALO.TO) also on a monthly and weekly basis.
Please email me if you want Doc to take a look at any other specific company charts – Fleck@kereport.com.
BB, I’m going to Ann Arbor tomorrow to see the Michigan basketball team play #10 Oregon Ducks.
Doc, what would be a good entry point for Avino (ASM)?
(ASM) Avino Negotiates Sale of Bralorne Gold Mines Ltd. To Talisker Resources Ltd.
November 21, 2019
David Wolfin, President and Chief Executive Officer of Avino commented, “We are pleased to announce this agreement with Talisker to transfer Avino’s ownership of Bralorne while retaining material economic exposure to the project through a significant equity investment in Talisker and the contingent cash payment payable upon the commencement of commercial production. We believe that Bralorne is best suited for a management team with deep exploration expertise and access to strategic investment capital from partners such as Osisko Gold Royalties (OR: TSX & NYSE) and we look forward to seeing them advance their exploration strategy at Bralorne as a supportive shareholder. This transaction repositions Avino as a pure-play silver producer in Mexico and greatly improves our balance sheet and liquidity. We believe that Avino is vastly undervalued relative to our silver peers based on our silver equivalent production profile, relatively low production costs and extensive resource base. Now with our improved financial position resulting from this transaction, we can focus our efforts on creating value in Mexico through exploration and other initiatives. Finally, I would like to thank all our staff and contractors at Bralorne for their dedication and professionalism over the years”.
While I’m slightly disappointed to see Avino sell Bralorne, they still have exposure to it, and needed the cash injection (which removes the concerns that Cory brought up about companies with downtrending charts that may need to raise money).
Overall it was likely the right move for Avino to sell Bralorne to Talisker, and puts them back to a mainly Silver-focused company, with some Gold & Copper credits at their primary production and exploration assets in Mexico.
https://www.avino.com/operations/avino-mine/avino-mine-overview-1/
As for ALO Alio Gold, they are finally starting to get the Florida Canyon mine in Nevada that they picked off from Rye Patch to produce as planned. In addition they have very big development and exploration upside with their assets in Mexico.
I agree with Doc that ALO may be in the dumps now and has been the last 2 years, but their upside re-rating is coming, and they will be a good distressed producer/developer optionality play on rising metals prices in 2020.
https://www.aliogold.com/assets/Development-Projects-Exploration/ana-paula-project/default.aspx
There are a number of distresses smaller to medium-size producers like Avinio & Alio that will surprise folks when the worm turns in this sector, as once again investors will learn that it is often the “Best of the Worst” (as Matthew so eloquently put it a while back) that outperform as their margins show the great percentage increases.
That is why despite many of these smaller Gold and Silver producers getting their rear-ends kicked for a while, that I still like distressed companies like JAG Jaguar, ANX Anaconda Mining, NEE Northern Vertex, HUM.L HUMRF Hummingbird Resources, HRT Harte Gold, EXN Excellon Resources, and SCZ Santacruz Silver.
Just look at how (SCZ) shot past most other companies on the PM run we had in the summer up about 250% at one point. Investors couldn’t understand why a bottom-dwelling high cost smallish producer like Santacruz Silver was crushing their precious Jr explorers.
It was exactly because SCZ has such high costs, that it immediately benefited when Silver when from $14 to $18, because of the huge impact this has on their improving margins. In addition, it should be noted that Santacruz Silver survived the bear market by divesting non-core assets to First Majestic, Americas Gold & Silver, and Marlin Mining (now Mako Mining).
Santacruz Silver’s AISC has been in the $18-$20 range, which is terrible at $14-$15 Silver, but not as terrible in the $17-$18 range. If Silver can clear that $18-$20 level in price next year, then a stock like SCZ will go from zero to hero the quickest, and thus has had some of the most upside torque to rising prices in 2019. This wasn’t a surprise at all to folks that understand how the upside leverage and optionality is created in these distressed producers.
This same concept will work for many of these similar companies like ASM and ALO that Doc and Cory covered in this editorial.
Instead of only chasing the herd-stories, or Tier 1 assets already properly valued, it has proven wise to diversify into some of the #BestOfTheWorst producers before each PM rally. We saw this play out in Q1 2015, in the epic surge of 2016, in the Q1 run of 2017 and the fall rally of 2017, in the Q1 run of 2018, the Q1 Run of 2019, and the epic move higher this summer.
The Gold price has done well holding in the mid $1400’s to mid $1500s this year, so if it can get above there into the $1600s then these tiny left-for-dead Gold producers will suddenly become prime real estate overnight, and the surge will commence. Most investors won’t realize until much later in the cycle, how much more valuable those producing and permitted assets will become, so the time to position in them is in the quiet before the storm.
At Sept 30/19 Santacruz had $23mill more current liabilities than current assets. Extinguishing this will likely require lots of share dilution. And they will need to raise cash to cover operating losses. I expect Q4 to be dismall as silver prices are lower than Q3 I believe.
Here’s a nice looking gold chart posted by @Northstar:
Northstar @Northst18363337
“#Gold in foreign currencies using the World Currency Unit as a proxy. Pure poetry…”
https://twitter.com/Northst18363337/status/1205610419345330179
check out this First Majestic chart posted by Bora Bora Capital:
Bora Bora Capital @Steve63051825
“$AG – Very nice breakout on the weekly. extremely bullish”
https://twitter.com/Steve63051825/status/1205598951778336768
@tibutch – “Gold spot over the last month started new higher lows since Nov 12 at 1452.10, Nov 29 1453.40, Dec 6 1459.10, Dec 12 1462.60 along with 2 new higher highs Nov 20 1473.30, Dec 3 1478.20 which did not hold Dec 5 but close at 1476.90 & today at 1476.70. ”
“I believe we will have a pop before year end to continue a rally till about the March PDAC show which comes in line with the seasonal strength of gold with a target around $1680 to $1700 is my call for 2020.”
https://goldprice.org/gold-price-chart.html
Also the spot did close to it’s 38.2% retracement at 1452.10 on Nov 12, so touchy no doubt about that but taking into consideration we are just starting the seasonal strength of gold spot I believe the spot is just starting a new upleg & that it will be good for producers going up to their fiscal reports next year before the PDAC show. The potential is there for good returns on junior mid tier producers which is were where I place most of my bets.”
“Gold producers usually have a good seasonal trade at this time of the year & if the spot goes bullish like I think it will next year due to the uncertainty of an election year in 2020 those producers could be good longer term holds in 2020. It’s all about risk & getting into plays that are in that $1000 AISC range or below should do very well imo.”
“Notice also that most of the gold producers junior mid tiers which are the plays I like have bounced off their double bottom lows in the second week of Nov by looking at many individual stock charts but good charts to read are ETFs. I like to use ZJG which is composed of most of them so it’s easier to spot a trend, after that I look for my picks to play that’s the risk I take since if you make the right picks your chances of having a better return than the ETF is there which is what I always try to do is beat the ETFs, not to be pretentious but most of the time I beat them.”
Gold’s seasonally favorable time of the year
“The yellow metal’s seasonably favorable time of the year begins in a week — Dec. 23, according to analysts, who are anticipating a year-end rally similar to last year.”
“Gold has done very well in forming a bottom. We continue to battle $1,460. This is construction. This cannot go unnoticed. This is strong technical support down here as we are rolling into seasonally bullish time of year, which starts about a week from now,” Baruch said. “Overall, the technicals are supportive. There is a lot of uncertainty still out there. I think gold should trade higher. But, there needs to be more of an immediate-term catalyst.”which comes in line with the seasonal strength of gold ”
Regards & all the best,
Marc or Ti-Butch
A CASE FOR GOLD AND MINING EQUITIES
Sprottglobal – 13 Dec 2019 – by Aditya Pattanaik
“We may be at an interesting turning point in the business cycle today with historic sovereign debt levels, negative interest rates in many countries, the risk of unfunded pension liabilities, increasingly protectionist economic policies and all-time highs in the general stock market. The economy and markets are operating under rules that are different from those of the past in many ways. There are many differing opinions about what will happen next but when something has not happened in the past, it is impossible to be sure about how it will end up. The charts below should stir up your imagination about where things could go.”
https://ceo.ca/@ap.sprottglobal/a-case-for-gold-and-mining-equities
Good chart from FranSix:
@F6 Re: Gold Daily #charts
“I felt I should re-iterate the gold daily chart because the previous posting had the previous shorter-dated version. The idea was to show the whole move from 1167. ”
“The gold spot price is testing the top of the wedge, though we might see a re-test of the low, much as it had in the previous wedge set-up: ”
Interesting update post on (LIO) (LOMLF) Lion One Metals from @Neksav:
@Neksav – “A world-class $4 million metallurgical and geochemical assay laboratory was commissioned at Waimalika in Nadi today.
The facility belongs to Lion One Limited and will service the company’s exploration, resource definition and development activities on the Tuvatu gold project in Nadi.
While officiating at today’s event, Minister for Lands Ashneel Sudhakar said the laboratory offered to deliver geochemical assaying for a large range of elements.
“Presently, gold and nine other potentially commercial elements are being analysed, however, the lab has the ability to analyse a range of 36 different elements,” Mr Sudhakar said.
“The facility will also be utilised to conduct metallurgical optimisation test work including flotation and leaching, water analysis and micro-testing of fluids.”
The company presently employs 50 local people and the number is expected to increase when it completes building the Tuvatu mine facility.
Ah – Here’s the article he posted that from:
The Fiji Times » $4m laboratory commissioned in Nadi
By USFNEWS- FIJI – December 13, 2019
https://usf.news/oceania/fiji/the-fiji-times-4m-laboratory-commissioned-in-nadi/
One of my regrets with Lion One is not having got a large enough position before it took off.
I’ve been watching for a reasonable pullback for the last few weeks, but it’s only moved higher, and am debating just adding in a 2nd tranche into strength, but really don’t like chasing stocks higher. However, the fundamentals and exploration potential with LIO are so huge, and with the respect and following Dr. Quinton Hennigh gets from resource investors (as part of their technical team), then it may just keep blazing higher.
There are stocks like Silvercrest and Great Bear that made true discoveries that just kept ratcheting higher and higher, and I regret not buying into strength on both. With Silvercrest I sold much earlier in the story, but had a hard time buying back in to such overbought conditions, but it continued to garner more and more buying. With Great Bear, the valuation just got so high it seemed like it got too far ahead of itself, but its only moved higher and higher. I get the impression that (LIO) may do the same, especially if they start proving out their theory on the size of the deposit matching similar ones are around massive volcanic calderas.
Lion One Metals (LIO) (LOMLF) Corporate Presentation:
Bob Moriarty: We Are Entering A Gold Bull Market, The Likes Of Which Nobody Has Seen In Their Lifetime
by Ceo Technician (@Goldfinger) – Dec 13, 2019
> Goldfinger: “Okay, so turning to the junior mining sector, so you know we have talked about Novo already. Are there any other companies that you would like to mention that have really caught your attention? I know you like Lion One. We did discuss that in the past.”
>> Bob Moriarty: “Lion One I’ve got to mention because they drilled some deep holes, these deep holes Quinton Hennigh suggested they should drill. They got ahead and did it. They found visible gold, they could have results out as early as this week. If it’s not released by the end of the week it won’t come out until January. It nevers makes any sense to release news after the 20th of December because of the holiday chaos.”
“But Lion One could have extraordinary results coming out.”
Doc, are you going to Orlando to see Michigan play Bama in the Citrus Bowl?
The following day you can see the Hoosiers play Tennessee in the Gator Bowl.
I’m glad Indiana is not playing the Crimson Tide!
George Schultz is 99 today.