Re: Is the bottom in?...charting
in response to
by
posted on
Feb 19, 2008 07:06AM
Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
actually I disagree that there's anything like a ceiling here at 4-5. It isnt necessarily about the fundamentals of the stock but more the altering fundamentals of the metal.
The current short position in silver is apprx equivalent to over 6months mining production. The gold ratio to silver when the Hunt bros were accumulating in the 70's pushed the ratio to below the historical low (geared the lower the stronger), to below 12. That means that the real ratio for silver to gold at 900.00 if were trading at its non Hunt period historical low, would be $75.00 oz. No sign of anything liike that, but we are in 'a' not 'the' bullish cycle for commodities until 2009/10, and we know some analysts believe that this isnt a cyclical bull for non ferrous commodities, also that its intrinsic - ie isnt just about the dollar any more, its about China replacing the US as the worlds top consumer of commodities. This is endorsed by both silver and gold rising in euro as well as USD. A weaker dollar supports exports and therefore also retail on the www. Manufacturing Im told is at last showing some strength, as it is in the UK.
If you look at the last time interest rates were cut consecutively (ie when gold and silver stocks benefited) you will be looking at 2003 (the bottom of the last bear market for general stocks). The evidence is that when interest rates are cut in a rececession PM stocks benefit. (www.bigcharts.com, www.stockcharts.com) In fact the leverage perceived on stocks to pm created tremendous supoprt for the pm stocks , most rose x5-x10 some in many multiples including several trading up and well over $5.00.
So while there may be 'some' selling resistance at $5.00, it isnt likely to be long term, and thats because this stock has never traded at that level before, there is no selling resistance. It all deopends on the price of silver, and how that equates to the value of ECU assets under the ground at any particular time.
The long term chart is actually very strong. Ecu seems to have just put in a double bottom retest on a rising trend line base following the lows in 2005.