Chart of the Day: This Gold Miner Is Starting to Shine
What a ramp up on gold over the past six weeks! We noticed when it touched $4,000 and tested that level on numerous occasions that the buyers were stepping up to add the metal. This was a good clue that $4,000 was firm and going to hold; it was only a matter of getting gold started to the upside. The tinder was there, and the match was lit when Treasury Sec. Scott Bessent announced an inflationary (anti-dollar) “twist” of Treasuries. More money chasing fewer goods is the classic definition of inflation, and gold took it literally and has run about 18% in a short time. It may not be over.
Eldorado Gold ($EGO) is in our EPS Diplomats basket, and as a miner, it has run hard along with gold. It is one of many unhedged miners that does not use forward contracts to lock in the price of gold, so the benefit on the rises and are punished when the metal falls.
But we see a very long base here for EGO from March to July, remember the longer the base the higher the space. This month has been spectacular the stock up about 50% on heavy turnover, momentum is strong with stochastics peaking. Money flow, as seen at the bottom of the chart is bullish. So is the moving average convergence divergence, as seen in the second pane.
We see more upside here at least to the January highs around $50. As a member of the EPS Diplomats Eldorado Gold does not have a rating.
At the time of publication, Lang had no position in any security mentioned.
