Kirkland Lake Gold

KGI dec 13 2012

We made a good trade with this stock more than a year ago. Then we recommended getting out conservatively at $18 (see previous blogs). The stock peaked $3 higher but for the most time has gone down nicely. The other day it lowered guidance. Also it has “cash” cost (the equivalent of variable costs, I guess), of $1253 per ounce. If other costs are included little is left at todays gold price.

Presently 2 different counts present themselves. The one in black is the simplest and would suggest the drop is complete. The purple one needs a substantial rebound before dropping lower (the lows in Nov. of 2008 were close to $1). Ergo, in both cases a nice bounce should develop  with a reasonable expectation that at the very least the gap should be closed. A buy with a stop at, say , $4.