GG

[David Randolph]

Goldcorp Inc. (GG). The Group's principal activity is to produce Gold. The Group also explores and extracts industrial minerals primarily sodium sulphate. The Group operated in two segments: Gold bullion and Industrial minerals. The Group's Gold mines include Red Lake Mine located in Northern Ontario and the Wharf Mine located in South Dakota. The Group owns industrial minerals operations in Saskatchewan, Canada which produces sodium sulphate primarily for the detergent industry. The operations of the Group are carried out in Canada and the United States.

As was discussed in this thread, GG seems to have the best fundamental background of the gold industry. The chart confirms this assessment, since the stock yesterday closed at a 52 week high:



I believe there was recently a fundamental shift in gold prices. My believe comes from the perception that gold is not anymore just an hedge to a falling USD, since the dollar rose over the past few months and the gold price rose too, altough modestly:

USD Index:


GOLD continuous contracts:


It would be a pretty safe bet to buy some gold contracts at this juncture, since we have this fundamental shift related to the USD and usually gold stocks precede the bullion price.

We have many gold stocks trading, and many of them showed up in my filters. But experience tells me you should ride the stronger horse, instead of picking up the slower ones. GG is the stock, from the gold group, that is closer to all time highs so this is the one I have to go with.

I'm buying GG at the open, 6.66% of the portfolio.

Everyday I will analyze GG after the market close until I sell the stock. I always tell I'm going to sell before I actually take action. You just have to follow the answers to this post.

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[Michael]

Hi David,

Great to see that you pick a gold stock, every balanced portefolio should have some gold these days. (even though I am sure you have other reasons!)

I am  considering GG. Their production increases are impressive, I would however like to get in a bit lower so I will probably miss the train! An alternative is Rangy, which is a combined gold/currency play (South African exposure) more risky but the reward could be outstanding.

[rocket8]

DAVE,

I have been thinking about the effect of the overall market on prices.

isn't it hard to do TA in an unsteady market.

i like GG.  watching still.

[armoredsaint]

Hello Mr. Rudolph
But you have really not fully appreciated Goldcorp's properties and prospects. First of all the inclusion of Wheaton River Minerals has brought many incredible low cost gold properties in Mexico, Argentina and Brazil. The compnay also produces copper which they use to offset the costs of mining the gold. This brings costs to a ridiculously low level and will be producing enormous earnings going forward. I am looking for 40 cents for this Qtr and 1 dollar for FY 05 IMO. This should bring the stock to 30-40 dollars a share by the end of the summer IMO     

[Tirebldr]

Whatta ya think of the amount of dividends paid out? What did that amount to in the year shown here? Anybody know? Yahoo says 1.12%. Is that right?

[David Randolph]

I appreciate your posts a lot, it's a pity I don't have time now to go through them, perhaps in the following update.

GG closed at support $15.77, prior resistance. The uptrend is very steep so it's natural for the stock to fall a bit in profit taking.

But I'm with armoredsaint, once the stock gets above this $16 level it's potential will be fully recognized and the stock should rapidly rise above $20.

[David Randolph]

The dollar has been strong, so the gold bullion, which is priced in dollars (and can be considered as a substitute to the dollar as a reserve), tried to go down over the last few days.

But it didn't fall much and «value investors» came in to bid GG up to where in opened on Friday's session, despite the fall in gold price.

GG reacted to an ascending trendline and everything is in place for a decisive breakout of the $16 level. After this the stock will probably climb over the $20 mark.

[David Randolph]

GG made a not so pretty candlestick yesterday. Gold did retrace a bit because of the dollar's strength but not so much as one could figure for a start. I'm a believer in gold for the medium term and GG is the best stock on the sector, both fundamentally and technically.

So I'm prepared to give it a little room  to manouver ... $15.16 is my treshold, I don't want to see GG close below that price.

[Michael]

David

In principle we have the same trading strategy. We just execute them differently

I bought GSS Yesterday I could as well have bought GG. I guess the decision was based on GSS more bullish growth potential.

When I evaluate gold stocks there are three components:

• Exchange rates
• Gold price
• The stocks fundamentals

I am in RANGY due to the exchange rate play and GSS is as said a growth story. But the real story for all three Stocks is the gold price!

The decision when to buy and when to sell Gold stocks have to be based on the prospects for the Gold price. You will see that 90% of all gold stocks has a similar pattern like GG. It has therefore more to do with gold price TA than the stock TA.

If you look at the chart below you will see that the gold price has fallen down to a level very close to bollinger lower band. As the theory goes you would expect it to climb back to the upper band. I am sure you could do a much better TA of the gold price (and I would really appreciate if you did!) but my point is that when you decide whether to sell or buy gold stocks just check in on the gold chart as well. As I read the chart it is time to buy now and not to sell.

Mike

[David Randolph]

Thanks for your analysis Michael, I'll do that gold chart TA in the weekend. I see many different patterns across the gold sector stocks though, they don't always act in unison.

The stronger the better, I believe, and GG is the strongest of the sector. The stock is absolutely ready to take off from this $16 zone, but of course, it couldn't do that yesterday, with those pundits (oops, I saw on the dictionary the meaning of «pundits», and what I meant was exactly the opposite ) buying for the wrong reasons (the London terrorist attack).

It is possible those guys were already punished with the stock closing 19 cents (or a bit more than 1%) below the open, and the uptrend is set to resume now. But it is possible too the stock goes down a bit today, with people that bought yesterday for the wrong motives exiting.

Holding on to GG, the strongest 

[David Randolph]

Jesus, I just saw, GG provides a monthly dividend? Cool 

Read the news, it tells why this company is so strong:

Goldcorp Declares Seventh Monthly Dividend Payment for 2005

[David Randolph]

Perhaps GG will have to consolidate for some time around the $16 level, I don't know. But I need to own something related to gold in my portfolio, and GG is the best stock in the sector.

Since I've known they take out gold from the ground with a cost of just $60 an ounce I know the stock is supposed to rise (I'm a medium term bull on bullion too, I believe it will go to an all time high above $800 an ounce in this bull cycle)

[David Randolph]

It's just a matter of time before GG decisively breaks $16 and then it will rise fast to $18.69, the estimated technical target of the breakout.

[David Randolph]

I have nothing more to say than what the chart below already says:

[nikao]

hmm.. im relatively new to TA, but aren't we seeing a nice ascending triangle here?.. just bouncing of the Support now and tomorrow or the day after we will see a break out on the third test of resistance?