Canadian Gold Stock Outlook Gorgeous

February 19, 1999

We haven't been this bullish on the speculative gold stocks sector in years! You will have to pardon our somewhat exuberant tone in this article—we normally approach our technical analysis of markets with a strictly unbiased perspective—yet we couldn't help but get excited when looking at the latest charts for the Canadian golds. For speculators who like to get in at ground-level prices and achieve quick profits, this most emphatically is the sector to be in! So let's get right into our analysis.

Aber Resources Ltd. is trading near the $12 level in the consolidation part of a bullish flag. Volume action for this stock—which bottomed late last year—has been positive. The Relative Strength Indicator (RSI) is also confirming the bullish trend. Once the $12 level is broken, the $15-$16 level is next.

Agnico-Eagle Minerals is not yet a buy for those seeking fast profits, but it is clearly registering a bottom—apparently of the head and shoulders variety. Volume and RSI are confirming the slowly developing bullish trend as well. This stock is for those who don't mind a bit of a wait, but profits will most definitely be forthcoming.

Argentina Gold—our famous fall pick—is still looking extraordinarily bullish. Like Aber, it is also in the midst of a bullish flag consolidation, and its "mast" is forecasting a move to $8.50 (from its present $5.50). If you missed this one when we called it last autumn, you can still get on for a fast profit if you act now.

Claude Resources is another beauty which shows a flag consolidation in formation. RSI and volume have been confirming the bullish trend ever since this stock double bottomed last fall. A winner at $2/share.

GoldCorp. Inc. is presently is in the ascending stage of a bullish ascending triangle pattern on the charts that is forecasting a move to $14 overhead resistance. The apex of the triangle has been reached and volume has been acting accordingly—this stock is within millimeters of a breakout. A definite buy.

We made a highly speculative call last autumn with Holmer Gold. We warned that there wasn't much liquidity in this stock and that it was a risky play; nevertheless, we recommended it to speculative traders as a "gambler's play" based on positive technical action. Well, it turns out our analysis was correct as Holmer was noticeably improved since then, as has trading volume (hence, more liquidity). The chart for Holmer shows a nice rounded bottom formation indicating the lows have been seen for this stock for a while. RSI has also markedly improved. Best of all, a bullish breakaway gap was registered on the chart last month and this forecasts the beginning of a sustained upmove. Still speculative, but at only $0.30/share a worthwhile play.

Jordex Resources also shows a rounded bottom formation on the charts and its RSI is improving. Volume has also picked up in recent months. Positive signs, but we advise waiting for additional confirmation before making commitments.

Kookaburra Resources, another of our successful "fall calls," is consolidating after a massive runup in price from $0.5 to $2.5 in only a couple weeks time. However, the trend is still up for Kookaburra and we fully expect to see higher prices once this consolidation phase is complete. All technical signs are go for this stock.

La Plata Gold is forming a nice bullish flag on its chart with a confirmatory RSI. A minimum target of $3.5 (from its present $3.0) can be expected based on the minimum measuring implications of the mast portion of the flag in its chart. Recommended for short-term traders, as $4 resistance will be very hard to clear.

One of the very few bearish stocks among the Canadian golds is Meridian Gold. We wrote in our last Canadian gold commentary that this stock was a short sell based on the bearish rising wedge pattern in its chart. Turns out our advice was timely. The apex of the wedge was broken late last month and prices are beginning to fall, as is the RSI. Still not too early to take advantage, though, since its decline is developing much slower than we had originally anticipated. We recommend entering short positions on reactions in this stock.

Three other stocks that show strong bottoming inclications and beginning upward trends are: Moss Resources, Mountain Province, and Pioneer Metals.

Northway Exploration is forming a flag consolidation in its chart that forecasts a move to $0.6 (from its present $0.4).

For silver players, Pan American Silver is forming a textbook perfect rectangle consolidation between $8 and $10. The first breakout above $10 resistance by 3% will send a strong buy signal.

Another of our fall picks—Scintilore Exploration—still looks very positive and is in the midst of consolidation. RSI and volume are both confirming the bullish trend. A breakout above $0.80 resistance will send a strong buy signal.

Finally, Yorbeau is putting in an apparent head and shoulders bottom. RSI is beginning to move higher and volume is noticeably picking up in this stock. A buy for intermediate-term players.

Clif Droke is the editor of the three times weekly Momentum Strategies Report newsletter, published since 1997, which covers U.S. equity markets and various stock sectors, natural resources, money supply and bank credit trends, the dollar and the U.S. economy.  The forecasts are made using a unique proprietary blend of analytical methods involving cycles, internal momentum and moving average systems, as well as investor sentiment.  He is also the author of numerous books, including most recently “2014: America’s Date With Destiny.” For more information visit www.clifdroke.com.

The world’s gold supply increases by 2,600 tons per year versus the U.S. steel production of 11,000 tons per hour.