CDN: Picking Gold Stock for the Canadian Stock Portfolio
If you are picking companies that deal in a single commodity, you have to follow the price of that commodity closely. Aside from the fundamentals of a companies, the price of the shares of that company will be tied to the price of the commodity.
That is what makes Kirkland Lake Gold such a great buy. That stock rose despite the poor performance of the price of Gold. Not every gold company has the same performance. It is too bad that it is too expensive for the size of our Canadian Portfolio poke.
I like to buy 1000 shares of a company stock... that is the only way to make real money. Think of it...
if I have 1000 shares of a company worth $50/share ($50,000)...I make $1000 for every dollar it rises.
If I have 100 shares of the same company ($5,000)... I make only $100 for the same dollar rise... if it is a good rise by having fewer shares like that you miss out on a lot of money.
With $100,000 to work with I want to find 5 stocks diversified if possible and devote $20,000 to each stock.
So if I find a stock worth $4/share... I would buy 5,000 shares... a $0.10 rise in price will get me $500.00 and in a rising breakout, a $0.10 gain in price is nothing.
Ok, the first step is to figure out if Gold is going to rise further in price or has it topped out?
Here are my first two charts on Gold
The P&F chart looks great... in a month and a half the price has broken through 2 resistance levels which have turned into supports now. The computer algorithm suggests $1484 as a price objective but I had a look at a coarser chart going back 10 years and it shows the next significant resistance at $1580... will it get there??? Would be nice.
The red/blue lines are column SMA's ... See how the blue is diverging bullishly from the red line....good stuff.
The Trigger chart is interesting... the red circles show a headfake breakout. It broke above the upper bollies for a day....Woo Hoo!... well not really,,, the slowSto was bullish but the MACD and BBWidth was declining. That shows NO BREAKOUT.
But look at the current price in the blue circles...it also has broken out... the slow sto has risen back to 80, and the MACD and BBWidth have an uptick.... Not 100% breakout yet, there may be a pullback to the upper bollie but if the MACD and BBWidth continue positive slope.... then it will be confirmed
OK... next two charts
There is nothing negative in these charts...The only indicator that is not 100%bullish is the ADX DI +/-. It is still bullish but declining as the green line is negative.... So it is ONLY Mildly Bullish.... not a problem
So is Gold stocks a potential Buy.... yep.
Looking at proposed Gold stocks
I have already looked at their fundamentals and As I said in real life I already own these 4 stocks so I know that the 3 remaining stocks have decent fundamentals I will give you a link to each for you to check them out if you wish.
Argonaut Gold Ltd. [TSX:AR].......... AR Fundamentals
No current debt, small long term debt,rising quarterly net income
Centerra Gold Inc [TSX:CG].......... CG Fundamentals
Low current debt, moderate Long term debt and large net income rising
Sandstorm Gold Ltd. [TSX:SSL]...... SSL Fundamentals
No Current debt, small long term debt, stable but rising net income
These stocks pass my limited FA :)
I will only do 2 chart comparisons for each stock
All three stocks are currently in consolidation and have gravitated to the 20daySMA... this is normal. The Centerra gold stock is marginally better than the other 2 since its has less dip to its price and the Slow Sto remains over 80
Again...all 3 charts are pretty decent but I do like the Centerra Gld chart for its On Bal Vol steady rise.
On the basis of these charts I think I want to have Centerra Gold in this fantasy Canadian portfolio
Currently the Bid/Ask for this stock is $10.75/$10.88 with a close on Fri @$10.82.... I will try the following order
Effective at the Market opening on Aug 6 (it is a holiday in Canada on the Aug 5... if Canadian markets are open on Aug 5 then we want the order to be effective then) and lasting for 5 days
Buy 2000 shares of Centerra Gold @ $10.88/ share.
In my experience if the stock opens lower, my broker buys it at the lower opening price.
UE |
