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Revisiting Five Gold Miner Stocks

Quint Tatro Oct 08, 2009 11:30 am


		These should have been winners, but now other sectors are more appealing.

“All last week the buzz was in the air... gold is sticking above $1,000!” (See Five Gold Stocks to Follow.) That was my introductory sentence on September 14, when I introduced you to the following five mining stocks that should profit from the run in gold prices.

Since that article, only one of the stocks highlighted has broken out to new highs. The other four merit a second look to see if they can offer the trader a second opportunity to turn green into gold.

Caveat number one from me: I tend to shy away from stocks that everyone else likes, so as gold makes it front and center around the barbershops of America, I’m more inclined to table my gains and move to another sector.

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However, if the current run in silver and gold continues, then mining stocks may still have some upside potential. On the charts below, I’ve only added an “Update” comment and a vertical line marking where I first wrote about the stock.

Vale S.A. ADS (VALE)
Original Trade: Long on break of last week’s high of $21.61. Stop just under the weekly 50-day moving average.

Click to enlarge

Update: Vale has tacked on almost $3 since I first brought it to you, and has clearly been the leader among the five companies I highlighted. Vale has had no trouble powering higher after breaking the resistance at $21.60, and the trend needs to be respected. I’d look for a pullback so any entry has a better risk/reward at this time, as chasing a hot stock is a prime way to get burned. If you bought on the breakout, take some gains and pull the stop up above break even, and see how far Vale can take you.

Iamgold Corp. (IAG)
Original Trade: Wait for a pullback into the channel before buying.

Click to enlarge

Update: “Should IAG offer a pullback into the channel, this is one to watch.” That's how I ended my synopsis of Iamgold the first time around. I was waiting for a basing pattern which brought Iamgold back into the solid channel it has been forming, and we’ve now gotten that exact pattern. If Iamgold breaks and holds above this four-week consolidation, consider that a great opportunity to look long. A stop should be considered below the lows of the basing formation.

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