CONTRARIANTHINKER

Patagonia Gold

I mentioned this stock in the article that warned of an imminent PM surge posted on Wednesday 8th. On the 9th prices reversed a ST decline and zoomed higher. PGD didn't move - it had already anticipated the rise. I decided to dig deeper into PGD.

My initial gut feeling that at 5 pence this stock looked interesting has already brought a small profit. However, after studying the company more closely it is obvious that it could become a 100 bagger if the gold bull triples or quadruples the price of Gold. It is primarily an explorer, with a small market cap. Management seems good (and well connected - an advantage in a NWO). They have been hit hard by local issues that are possibly negotiable, and are at a low price right now. I am repositioning my PM resources and allocating a more significant share in this company. No more that 5% of portfolio though.

PGD.L Chart 1 and comment

Patagonia Gold has around 261 million shares issued. The stock price is down from nearly 18 pence at the start of the year. (Currently 7.5 up from a low of 3.5, off a slightly scraggy triple bottom @ 4p & change) Chairman is a big hitter – Sir John Craven is nonexec chairman. Share price was hit hard by suspension of mining operations by Chubut province govt. in Argentina. Just as Gold was taking off for $725. I am thinking if the ban gets lifted (PG are hopeful) and gold is on a tear @ the same time (which I think is imminent) the share price could catapult above old highs. There is a rising up-trend resistance it will IMO find at some time if it stays in business. That would be a 4-bagger from here. However, a break of this R line would constitute a rising quad top breakout. The price objective from this I will leave to others to calculate should we ever get there!

PGD.L Chart 2 and comment

This is a close look at the weekly chart showing the effect of the Chubut problem on the share price. Just as Gold was rising to multiyear highs bad news hit. However, the plunge looks overdone. The weeks marked with red balls look very significant, being – 1) sell-off, 2) downside blow-off and sharp reversal, and 3) accumulation . On the intraday and daily chart (inset chart 1) this weeks spike is a flagpole on raised volume, followed by a flag unfurling on much reduced volume. Factor in the bull cross in the MACD plus the fact that it has a long way to go up (oversold) and PGD.L looks like an interesting speculative play. Certainly sparked my interest! dB

Don't take my word for anything. Belief is the enemy of truth.

© ContrarianthinkeR 2002-2003 all rights reserved. Caveat Emptor - Buyer Beware! Any information posted on ContrarianthinkeR is not intended as direct advice. Do your own research before devising an investment strategy. I did. Webmaster RODIN