Small downside, large upside is the game to play IMO. Along those lines here is a post from Gold-Eagle:
DROOY's OUTLOOK
( 8x8-- ) Feb 27, 13:11
One of the tenets of Technical Analysis deals with base building. It goes something like this. A stock that declines substantially will eventually find its
nadir. Subsequently and often it will take years to form its basing price range. During this period of base formation nearly all 'weak' stockholders will
have finally bailed out in frustration, leaving the company's ownership only in core 'strong' hands.
The eventual stock recovery will be a function of two cardinal factors:
1- The future price rise will be directly proportional to the length of the basing period, and
2- What were the historic price highs of the stock.
How does this apply to Durban Deep ( DROOY ) ? Remember, I am referring ONLY to Technical Analysis Factors as opposed to the Fundamentals
( ie the POG, US Fed policies, FOREX considerations etc etc ) .
DROOY has formed a solid base during the greater part of three years ( in fact it's textbook classic --see chart below ) . Further, we see the most
recent high in the period was about $9.25 US in early 1997. Particularly indicative that basing period may well be at an end, is the significant trading
volume buildup during the last five months. This reflects accumulation by 'strong' hands, which might be institutional and/or a large international mining
company seeking a major acquisition.
Based upon historical precedent and TA principles, once the basing period reaches completion ( usually when 'strong' hands have snapped up their fill )
, the stock will without warning gap upwards in a burst of strength. It's initial momentum will carry it far, attracting aggressive investor interest across the
board. Finally, new speculative money from small to medium investors will "jump on the bandwagon," so to speak. This will further fuel the price rise.
To put this in a nutshell, I see DROOY's basing period quite near its end. The downside risk is minuscule in relation to its upside potential and reward.
Once it indeed breaks out, DROOY will rapidly seek its only near-term resistance at about $9 US per share. HOWEVER, taken into account gold's
fundamental sea change as per the Washington Agreement on September 26, 1999, it sets the stage for DROOY's price to far surpass the $9 area as
the gold 'calf' matures into a full-grown bull.
Personally, I have been accumulating DROOY stock in this basing period - and I am buying more recently at these basement bargain prices. To be
sure, DROOY's biggest kicker in a gold bull market will be its extreme leverage to the POG. It is a well-known fact DROOY is perhaps the most
leveraged gold company in the world. Once that factor takes hold, DROOY shares will literally and inevitably go ballistic, which will attract e-Trader
attention - who care not about earnings, balance sheet nor the company's future prospects. As countless "dot.com" companies ( with PERs from 1,500
all the way up to infinity ) are testament, e-Traders are only concerned that the market price is soaring to the heavens. There is every likelihood of a
"DROOY.com" effect when the POG finally lifts off.
At just pennies more than a buck and a half per share ( equivalent to a Fast-Food cup of coffee ) , DROOY is literally a 'steal.' And if I can get enough
more shares BEFORE DROOY's lift-off, I could conceivably buy a small Coffee Plantation in Brazil with my winnings. In any case I will be able to
take early retirement in the next gold bull run?and to hell with Social Security.
P.S. - it was already mentioned on the Forum that DROOY nearly doubled its value in a couple weeks in short but impressive gold rally of Sept/Oct
1999.
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