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The Tasiast mine is an open pit operation located in north-western Mauritania. (Handout)
The Tasiast mine is an open pit operation located in north-western Mauritania. (Handout)

Schizas' Mailbag

Kinross Gold forging a trail of tears Add to ...

Hello Lou,

My investment in Kinross keeps on going south.

May I have your comments? Should I be patient and hold it for a turn around? Is this stock seasonal? Should I sell and take the loss?

Many thanks and I look forward to your thoughts .

Regards,

Attilio



Hey Attilio,

This will be the fifth time that I have analyzed Kinross Gold Corp. since July 12, 2010 when the shares traded for $16.73. For close to two years the company has forged a trail of tears as it destroyed shareholder wealth. My last post was published on Nov. 21, 2011 when the stock closed at $13.12. It was advised that K was trading in a down channel and would need to retest $12.00 if it was going to reverse the downtrend. Unfortunately it failed that test and has plumbed new depths. Another round of due diligence will help answer some of your questions.

More related to this story

The three-year chart tells me all I need to know.



The trend is your friend and it has been down since the fall of 2009 when K traded at just over $24.00. The best time to own a stock is when it is going up. Efforts to call a bottom can often lead to finding new lows with your hard earned capital. What is evident is that every attempt to move higher since November of 2011 has met resistance along the 50-day moving average. When the stock breached $12.00 -- which had provided support going back to 1995 -- it was an ominous sign for shareholders.

The six-month chart provides another chapter in the betrayal that started in 2009.



The signals that are evident include a death cross that surfaced in November of 2011, resistance all along the 50-day moving average and a failure to hold support at $12.00. Currently the MACD and RSI are not indicating that the downtrend is in the process of ending.

To answer your question about holding onto K, I would say that you should preserve capital and look for another gold miner whose stock is going up. As for seasonality analysis I recommend that you spend some time at dvtechtalk.com, authored by my good friend Don Vialoux. You will be greatly rewarded for the effort.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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