alice

NFTRH Update; A Gold Royalty & a General Gold Sector Update

Let’s take a look at a daily chart of Sandstorm (SAND, SSL.TO) since one theme going forward (in an inflationary phase) is to prioritize Royalty/Streamers and exploration over gold producers, and SAND remains a stock of personal interest (and a current ‘Strong Buy’ from Mark at IKN).

I want to reiterate that we are only managing potential bounces in the sector for now.  Some great downside work has been done and risk vs. reward has been much improved but there remains a case for future lows.  So please consider those points.

SAND has support at the top of the consolidation pattern that formed in May-June and while it has not yet bounced, this area could provide support to a bounce attempt.  I’d have rather seen the price get down to the SMA 200 and that could still happen as these fights for support tend to be grinding affairs.  If/when SAND does bounce the logical target is former support at 5.20.  Who knows, maybe by then the SMA 50 will have curled down far enough to add confluence to that area as resistance.  The EMA 50 is already there.

sand daily chart

HUI is as we left it last, right at the key support zone we had on radar for many weeks.  In hitting and dropping below the SMA 200, it’s a candidate for a bounce after filling the May gap, while at the same time we respect the fact that there is another gap from early April at around 180.  If Huey bounces, the target would be 220 to 230.  The former is the August low and the latter would fill the September gap down.

hui daily chart

Again, I am not saying the lows are not in already.  It’s just that technically, there is not only no evidence of it, but there are other logical candidates for bottoms at lower levels.  So let’s just take what is presented to us…

  • An improved reward vs. risk compared to July, August and September.
  • A hit of the 200 day moving average, which signifies a significant correction that can be bought (by certain types of investors who know themselves well) with the idea that new lows or not, this will have been a buying opportunity for longer-term investors assuming the fundamentals remain intact.

On that last note, gold has bounced vs. silver and that happens IN LINE with improving sector fundamentals (I know it is counter intuitive, given that the sector usually rallies when silver leads).  Also, the weakness in the stock market had to come about or we’d have been forced to make some uncomfortable decisions about the view on the sector.  Gold vs. Palladium and Oil may bounce as well.  So fundamentally, the troubles in the broad market help the counter cyclical gold sector.  But let’s not form conclusions and let’s do realize we are in a process.