To all the Bulls HereI feel sorry for all the permabulls here, especially if you invested in TGZ at $1 or higher. I see a lot of you posting as to why this is so undervalued and so on.
Bottomline is that Gold is now going down and it looks like that on a monthly candle, it will test its 2 year low of 1045. The risk is if it does not hold 1045 then the next support is at 980 and then at 716. Ouch !!
Also, GDXJ has not caught up to the carnage in Gold Price. All else being equal, GDXJ will test its 2 year low which is another 50% lower from where it is currently trading. There is still some optimism left among mining shareholders but it will fizzle out once the reality sinks in.
In the context of TGZ, it means that this can go to 35 cents or lower once GDXJ test its 52 week low. Now TGZ's 52 week low was 38 cents but at that time the shares outstanding were 400 million. Now TGZ has another 160 million more shares outstanding. Yes, they raised some money but that will just go to fill the big hole they are going to be in at these Gold Prices. They are negative cash flow at Gold Price below $1200. So, they are burning cash at today's prices.
Gold has some major support levels to test and breach in the short to medium term before it can really bottom out. It is a fact that gold was trading between 400-600/oz before 2009. Now that is a scary thought, ain't it ??
GLTA.