Back in Febr. of this year we expected this stock to rise to about the level of the B-wave and then crash again. Alternatively an entirely new bull market had started at the $2.50 during the last months of 2014. (One chart is arithmetic and the other semi-log!).

This stock trades out of phase with the rest of the gang. It’s low was two years earlier than the vast majority of gold stocks. Also it is now up more than 10 times the low, a performance that no other gold stock has. At the same time it is not clear why it is approaching the all time high, when gold was at $1900, now when gold is at the $1250 level.

    Given the above , we are open to the notion that we are in a huge flat, 3-3-5 or A-B-C. It could stop here or climb to the all time high and then roll-over into the C leg which should take it below $2.50

    The last quarter income statement shows non IFRS “cash costs”at $637 per ounce and the”all-in sustaining costs” (AISC) at $824. The AISC is expected to be $940 for the near future.  These are middle-of-the-road numbers and as far as I know do not explain the large stock market performance difference. This mine is relatively new having started production a little over a year ago. For this reason it may have attracted more attention by the investing community than would otherwise be the case. We will keep an eye on it.

We have made some good calls on this stock. Right now we are not at all sure what to make of it. We think it is ahead of itself big time. The recent low was around $4 and we got to $21 which is a fivefold increase. Were we to apply that to ABX we should have that stock around $40. Goldcorp went from a low of around $13 to $21 but should have gone to $65, which would have been a new all time high. DGC is new and big and is not making money. Recently they came out with a new LOM, a Life of Mine plan, a little bit like getting a facelift. This is the first time that this was done by DGC’s own technical team!

There is something missing in the equation. Perhaps this is the new darling of the goldmines but we just cannot escape the feeling that this one is a tad ahead of itself.

In EW terms, as said, it is not clear but one possibility is a double zig-zag, that is an a-b-c X a-b-c. If you like head & shoulder stuff , that would be pretty scary too. Time to sell.

I looked at my previous blogs and notice that the low was actually more like $3, which makes the above math even worse. Our target then, exactly a year ago, was actually $28. The problem is that they are doing it alone.

If wrong this stock could go straight up, as in a series of 1-2’s. We would now be in 3 of 3.

The usual then – Nov. 5, 2014 – and now charts;

So we had a second buy at about $6, then an intervening sell at just under $10 but only if you were uncomfortable, now we would sell regardless. It is a nice double in about two months or 1000% or so compounded per annum. Our sell is based on uncertain wave structures and the application of the best motto in this business, “when in doubt, get out”. In the bigger picture here are the two main possibilities;

We will keep an eye on it but otherwise leave it alone un till the count becomes clear. By the way, Kinross (and quite a few others) have a similar a-b-c’s  from the recent lows which warn that another down-leg is still possible. Note that the RSI and MACD both appear close to a critical level.

The usual then, 5 Nov. 2014, and now charts;

We went from $6.02 to $10, almost 70%. The call was based on this being an a-b-c correction. That still looks to be the best bet, but there are other possibilities which might be less bullish. This stock is extremely sensitive simple because it is the new kid on the block (see previous blogs), but it is by no means a cheap producer. So if you are not completely confident take the profit and run.