GOLDEN MINERALS...

originally published February 17th, 2014

Golden Minerals looks like a most attractive speculative play here. Despite its name it is primarily a silver stock. On its 4-year chart we can see that it has suffered an exceptionally severe decline from its peak late in 2010, so that it is very cheap indeed as it is now only about one 28th of its price at its high. While being cheap is not in itself a reason to buy something, this stock has shown strength in recent weeks and demonstrated that it is going to rally with the sector, as we will soon see. Volume indicators, which have been weak, have turned higher with the price as it has started to recover this year. The current tight bunching of the price and its moving averages indicate a tight technical situation that could trigger a powerful rally.

On the 6-month chart we can see Golden Minerals demonstrating that it has no intention of being left out of the party as the big sector rally gets going. The price has doubled since the end of December, and while this would normally put us off, the fact is that this is still very cheap as even after this rally it is about one 28th of its price at its peak, and thus has huge upside if the sector rally gathers pace as expected. At this point it still hasn’t gotten above its falling 200-day moving average, and experience shows us that the real big upside action will start once it breaks above the resistance level shown and above its 200-day moving average. Once this happens it should accelerate away to the upside, action which will quickly result in a bullish moving average cross. Volume action is strongly bullish as we can see, with big volume on up days, mostly dying back on reactions, and the price has the support of its now rising 50-day moving average pulling up beneath it. It is not wildly overbought as made plain by the modest reading on its MACD indicator, and so it could break out above the resistance at any time – and probably soon given that silver broke out just last Friday, and looks set to take off higher.

The conclusion is that Golden Minerals is an attractive speculative play here with the potential to make large percentage gains in a relatively short timeframe. The stock trades in good volumes on the American Stock Exchange (AMEX). The company has just under 50 million fully diluted shares in issue, which is reasonable.

Golden Minerals website

Golden Minerals Co. AUM.TSX, AUMN, closed at C$1.03, $0.93 on 14th February 14.

Posted at 6.30 am EST on 17th February 14.