How about an analysis of Pretium Resources.
Thanks for the assignment. This will be the first time that I investigate the patterns associated with the charts for Pretium Resources Inc. (PVG TSX). The company owns the advanced stage Brucejack gold project in northern British Columbia. The estimated mine life for the project is 18 years with production forecast to reach 7.27 million ounces of gold. What caught my eye was the grading of 15.7 grams/ton which is by most measures is a high grade deposit.
The all in cash cost of $448.00 per ounce would, at a market price of $800 per ounce, result in payback in just 4.5 years from the start of production which is forecast to begin in 2017.
An inspection of the charts will form the basis of my analysis.
The three-year chart portrays a stock that has been trading in a range since the beginning of 2014. Support at $6.00 and resistance at $8.00 has been the steady state with occasional and short lived breaks above and below the range. What is interesting is that the stock has held its own while the chart for gold itself has been in a decline for most of the last three years.
Here is the three-year chart for gold. When we compare the two charts its clear that as gold proceeds we see concurrent movements in the price of PVG.
The six-month chart pulls into focus the signals generated by the MACD and the RSI. In June when the shares were trading near $7.60 the momentum indicators alerted investors to the selling pressure that was building and in late July they pointed to buyers returning to the market. At the moment the stock is once again meeting resistance near $8.00.
Until we get a sustained uptrend in gold we shouldn't expect a steady advance for PVG. Trading the stock for profit within the range would be the best approach until we start to see evidence of a breakout or a breakdown.
Next time I will conduct a study of EnCana Corporation (ECA TSX) for Boris.
Make it a profitable day and happy capitalism!
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