Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Flag Resources (FGR.A A) -- Ignore unavailable to you. Want to Upgrade?

To: ali who wrote (2372)	2/24/2000 7:12:00 PM
From: larry craye	Read Replies (4) \| Respond to of 4269

Oops I'm one of those who lost his nerve today. Sold 3000 @ .55, no big deal. I'm enclosing the article I read this morning that made me do it. Worth reading. Miami, FL, February 24 /SHfn/-- Platinum price speculation has been reigned in. Yesterday, the Japanese ruled against additional rampant speculations in palladium. When government bodies and the regulators move into a financial area, that generally drives the speculators out of the play and kills the momentum. The Tokyo Commodity Exchange (TOCOM), the world's largest futures market for palladium and platinum, said palladium futures contracts bar spot February would only be allowed to trade at today's closing prices for an indefinite period. In New York, the New York Mercantile Exchange (NYMEX) increased margins by more than double. These were the types of rule changes in late 1979 and early 1980 that massacred the momentum of the rally in gold and silver prices. These regulatory actions will force speculators to close out long positions and allow bears to cover their short positions. Lower palladium and platinum prices will drive speculators out of North American palladium/platinum stocks, of which there are a grand total of two. (Yes, there are probably others, but they're just hunting and pecking for the metals in order to bolster their stock prices.) The two platinum/palladium exploration companies that are ripe for shortselling are Stillwater Resources [SWC] and North American Palladium [T.PDL]. We would recommend shortselling the decimated gold stocks, but the greater reward lies with the stronger rallies we've seen in these palladium plays. The rapid rise in the stocks featured below came from the breakout in palladium and platinum futures trading. The January 24 to February 17 rally in these metals corresponds with the commodity price runups. "Technically, SWC shares are nose-diving." There wasn't much news during that period, from either company, other than SWC announcing a 17% production output increase. The 47% increase in SWC's share price came from the commodity rally, not the production increase. Technically, SWC shares are nose-diving. The daily stochastic and MACD have turned south. The short-term moving averages are vulnerable to a descending crossover. Barring a significant Russian strategic blunder, the metals correction should continue for another few weeks. Any major Russian shipment would murder the speculation in the commodities and negatively impact SWC further. It would be reasonable to aim for a $32-3/4 to $33-1/2 per share price target on this shortsale. In early January, North American Palladium [T.PDL] announced it received a positive detailed feasibility study on the proposed major expansion of the Lac des Iles open pit palladium mine. The Lac des Iles Mine is located 85 km north of Thunder Bay, Ontario and is Canada's only primary producer of platinum group metals and one of the largest platinum group metals deposits in the world. It should be noted that PDL is not actually producing palladium, just hoping to develop the mine. That costs money. While the recent rally was encouraging for the company, will they actually raise the money? How long will it take to construct the mine? Will it be on schedule? There are a lot of conditionals on this one. It is more vulnerable to a very serious correction than SWC, because it is in the tricky developmental phase of the mine. (Exploration offers the blue sky potential, mining produces earnings, but development involves a lot of sputtering.) Technically, the potential percentage drop in PDL shares could be more rewarding. A C$5.25/share base was formed between January 10th and 20th. A commodity plunge would bring about a severe investor exodus in PDL and SWC shares - more so for PDL because they might never produce any palladium. The reward/risk is greater in shortselling PDL shares in the C$10/share range. A stronger shortsale position can be leveraged against the stock and the percentage gain is in the shortseller's favor. Because these draconian restrictions will artificially hold down prices, that will drive investors out of both stocks - at least temporarily. It appears there is about another week of window opportunity in this shortsale. Around March 3rd, you may be required to change your strategy. That would be when the two weeks are up. See below. For those believing that this current dip will be bought, please refer to the Russian Finance Minister's comments of February 18th, when he said, "Within two weeks all export problems will be sorted out. Russia will be a permanent participant in the market just as it used to be. I don't think importers of this metal should be worried." The new Russian regime appears sterner than the loosely run Yeltsin federation. Ultimately, the speculator is gambling on whether or not Russia can provide the market with palladium.