Hecla Mining Company
Clive Maund
From the long-term chart two further, pertinent observations can be made. The first is that there is definite resistance between about $6 and $7.50, arising from the considerable volume of trading that occurred in this zone from 1996 through mid-1998, due to trapped buyers in this zone taking the opportunity to "get out even". This resistance capped the advance in May of last year and January of this year at about $6. A sharp advance into this zone can therefore be expected to lead to a reaction and period of consolidation before further progress is made. The second observation is that the price is now clearly waiting on the price of silver to break out of the current large trading range, as evidenced by the knee-jerk upward reaction to a recent twenty-cent rise in the price of silver. A significant advance by silver is therefore likely to result in the price of Hecla bounding above the resistance between $5 and $7.50. Note that the first resistance zone shown on the chart immediately above the current trading range has already turned the price back twice, and is expected to be overcome when silver breaks out above $5.00. Note also that while the higher zone of resistance, between about $10 and $15, can be expected to stall a rapid advance into it from some way beneath, it too will be overcome as the silver bull market unfolds, after a due period of consolidation.
Hecla is definitely highly recommended for long-term investors, who can afford to buy this stock and then return to their leisure pursuits, confident of a very substantial percentage return over, say, a three to five year time frame, as in the silver bull market that is likely to ensue, this should once again be at least a $15 stock. Here it is appropriate to add that in the event of hyperinflation in the US, it will go much, much higher. Short and medium-term traders need to be cognizant of the fact that silver, unlike gold, is not yet in a confirmed bull market, it is still in a base area. Hecla can therefore be expected to flip-flop back and forth in the large trading range formed between approx. $2.50 and $6 over the past year until silver gets moving, although I expect it to edge towards the upper end of this range. Should Hecla again drift back towards the lower end of the current large trading range at about $2.50, the opportunity should be seized by short, medium and long-term investors and traders to scoop up the stock.
A final point. Although silver has not yet started its bull market, it should be noted that it is currently at a very low price, historically, and I believe the coming silver bull market is going to be BIG, in percentage terms even more exciting than gold, and that it will likely get underway sooner rather than later. If so, there is not much time left to accumulate this stock before it breaks out upside from the current year-long trading range.
Readers wishing to learn more of the fundamental background of Hecla are referred to the recent interesting article by Peter Zihlmann covering fundamental aspects.
NYSE Symbol is HL
Closed at $4.05 on 14 May 2003
Clive Maund, Diploma Technical Analysis
clive.maund@t-online.de
www.clivemaund.com
No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
Kaufbeuren, Germany, 14th May 2003
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