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Frank Holmes, CEO, US Global Investors on where the opportunities are in the gold space. (BNN Video)

Frank Holmes, CEO, US Global Investors on where the opportunities are in the gold space.

(BNN Video)

Schizas’ Mailbag

Shore Gold: Only adventurous investors need apply Add to ...

Hi Lou

Shore Gold was dead in the water for at least three years because no big investor stepped up to the plate to take the play to the construction stage.

Now I notice that since December, the volume and price has jumped.

Has Mr. Big appeared in the wings?

Bob

Hey Bob,

Thanks for the assignment.

This will be the third time that I analyze the shares of Shore Gold Inc. since 2009. The last was on Dec. 14, 2012, when the shares were trading for $0.22. Jules wanted me to comment on the stock. The research undertaken sixteen months ago indicated that there was a long established downtrend that started in June of 2011 with a death cross forming by the end of the month. The MACD and the RSI were not pointing to a trend reversal and the shares were meeting resistance along the 50-day moving average. At the time there were no signals that a trend reversal was pending.

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You asked about Mr. Big entering the scene with sacks of cash. Unfortunately I have found nothing to indicate that a deal is pending. Financing has been the final hurdle for SGF going back to my first analysis in 2009. Unfortunately you can’t fight the macro trends. Major mining companies are looking to get out of diamonds and the junior mining sector in general is fighting headwinds when it comes to financings.

Another inspection of the charts will provide the basis of my opinion.

The three-year chart reveals the grinding retreat that has been in play since 2011. SGF hit a 52-week low of $0.115 in December of 2013 where it caught a bounce that ignited a run to the 52-week high of $0.45 in March of 2014. Not a bad ride for those that caught the move. The MACD and the RSI both signalled the buy in December and then a sell in March. The aggressive move higher in March was triggered by news that the company plans to drill up some additional targets to expand its resource base. In addition the downtrend line has been breached and a golden cross formed in February.

The six-month chart displays the advance over the last 120 days and the pullback from the 52-week high as SGF got overbought. The MACD and the RSI generated the sell signal in March and are not currently pointing to the start of a new uptrend. What is also expressed is a test of support along the 50-day moving average.

SGF has been a disappointment since it hit an all time high of $7.68 in 2005. If you decide to chase the stock please be sure you understand the speculative nature of this investment. I would suggest that you let patience guide your actions until there are better signals that investors are stepping up to buy.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.

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