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Trading Alert:
Golden Peaks Resources LTD (TSX: GL; OTC PK: GDPEF) |
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Here's a chart of GLD- the
EFT
which trades on the NYSE and mirrors the price of gold in a 1 for
10 ratio. If the price of gold happens to be $680 per ounce, the price
of GLD will be $68.
If you're wondering why small stocks
seem to be out of favor today, gold is one of the culprits along with anything
commodity related. Small stocks in telecom, internet, and biotech are falling
back as money flows from those issues into the red hot commodity sector.
Many believe if gold breaks the $700 barrier, look out above.
While I love the contrarian mentality
of buying groups out of favor and waiting for the market to turn, I am
also sensitive to the idea of finding what people want in any market environment,
and delivering ideas in those sectors.
The OTC Journal's most recent
commodity related idea- US Energy (OTC BB: HYFS) has already been
a big win. On April 20th I published on the stock at $.27. In the
April
26th newsletter covering the contract with NY, I stated "I would
be very surprised if we don't see the stock trade to the $.40 mark tomorrow.
I just don't know if it will hold". I was wrong- on April 27th we made
a high of $.43. Kaching if you traded- 60% in two weeks. Of course,
that is a bit misleading in the real world. It is almost impossible to
buy at the absolute bottom and sell at the absolute top- however, you could
have easily scalped 40% out of this one.
In keeping with the OTC Journal's
theme of uncovering microcap stocks that you might not hear about on your
own, today's trading idea is in the gold sector. A quick glance at a gold
chart leaves no doubt about why small gold stocks are red hot right now.
I came across this idea from one of my wide ranging contacts in the microcap
world who happens to be a fund manager with the "Midas" touch in this sector.
Hence, I have loaded up my own personal account (no guarantee- I'm am wrong
about plenty of stocks), and will share the idea with you.
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Golden
Peaks Resources LTD (TSX: GL; OTC PK: GDPEF) |
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Golden Peaks may have uncovered
the motherlode in the Patagonia Region of Argentina.
The company currently has 25 million
shares I&O, and $20 million cash in the bank. The first round of drilling
results in the Chubut Province in Argentina indicates a possible major
gold discovery.
The stock currently trades on the
TSX- Toronto Venture Exchange, but has been approved for a more senior
listing. It is called a Tier 1 listing, and is the equivalent of a US listing
on the NYSE. In the next several weeks the stock will make the move up
to the Tier 1 listing.
Gold investors and analysts are buzzing
about the Fortuna Project. It's in a very mining friendly place- there
are few inhabitants, and the terrain is easily accessible. There are no
trees- it is primarily rolling hills and barren scrub land.
Golden Peaks has a joint venture
in place with Minera Hochschild- one of South America's oldest and most
respected mining companies.
Early estimates have the find in
the 10 million plus ounces of gold range. More drilling will need to be
done to prove this out. Within the project there are six major structures,
all of which appear to have extensive high grade gold outcrops. They all
appear to originate from a convergent area called the "Amphitheater".
With the current gold prices, every
million ounces they prove up should be worth about $4 per share to the
shareholders. Early estimates of 10 million plus ounces could therefore
put the eventual value at $40 per share- which would be extraordinary.
Here's a chart of the last few months.
As you can see, the stock has already had a great year. Ideally, I'd like
to see the stock trade down to about $2.60 Canadian for the best entry
level.
The stock broke out in late March
as it extended out into an "ascending wedge". The same type of pattern
is building now, and I'd like to have everyone in before the next breakout.
If gold continues to trade well,
drilling results will drive this stock the way clinical results drive biotech
stocks. More drilling results are due soon.
The company's primary listing is
in Canada where it trades on a second tier exchange known as the "TSX"
or Toronto Venture Exchange. A Tier 1 listing to the Toronto Stock Exchange
has been approved, and it is expected to begin trading there in the near
future.
Buying the stock from the US is a
little tricky. You can trade it under the symbol GDPEF on the pink sheets-
I have been able to buy it online. You don't get a live quote if it doesn't
come from the TSX- GDPEF only shows the last price from the day before.
You have to look at the live quote on the TSX, and guess the exchange rate.
Alternatively, you can simply call your brokerage firm and say you want
to trade in GL on the TSX in Canada.
If you want to track it on Yahoo!-
the symbol is GL.V and/or GDPEF.PK. GL.V is the Canadian quote- GDPEF is
US adjusted for the currency exchange.
I have accumulated 25,000 shares
at an average cost of about $2.60 US or $2.90 Canadian. You should be able
to trade it online in the US using a limit order- it would be wise to place
the limit order a few cents above the market.
I'm looking for $4 to $5 in the next
30 days. Drilling results should fuel the next leg up.
I've been accumulating this one in
my own account, but it's no guarantee you won't lose money- I've been wrong
plenty of times. Most recently, if you followed my trading strategy on
DXCM you made a killing. If you followed me on HDY you left some money
on the table. I was wrong about the Mets in '69.
However, if you are looking for a
red hot gold stock, this one is for you. I will set up a BLOG on
this stock next week so you can track my trading strategies.
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