The market is taking one step back and two steps forward. The momentum is still carrying the market higher, though the internals started to show signs of weakness. The gold market is, in general, moving opposite to the market. If the market continues to rally, gold will come off. I believe gold will likely be range-bound in the near term, until the traditional gold run in the fall. There may be swing trading opportunities while we are waiting.
I have been focusing on companies with strong balance sheets and good margins, like OceanaGold Corp. (OGC:TSX; OGC:ASX). Recently it bounced every time it got close to $CA4/share. The grand opening of Haile mine is schedule in mid-June.
I have been hearing from investors, who have been chattering that the recent high-end real estate markets from New York to San Francisco have weakened significantly, likely due to the tight currency control in China. A lot of Chinese buyers were not able to get renminbi (RMB) out of China to complete their purchases. I also heard a cash crunch appeared in a few Chinese companies. LeTV is laying off 85% of its U.S. workforce this week, for example. LeTV has its own problems and can't be used to generalize about other Chinese companies. But these are warning signs and I always pay attention to those. Moody downgraded China this week to A1 as well.
I would like to call attention to a few juniors. Scientific Metals Corp. (STM:TSX.V) changed its name to US Cobalt (USCO.TSX), make it a new play in the hot cobalt market. Cobalt stocks showed signs of recovery recently. The other two, eCobalt Solutions Inc. (ECS:TSX) and Clean TeQ Holdings Limited (CLQ:ASX), advanced recently.
Camino Minerals Corp. (COR:TSX.V) started to drill the big targets. The company raised money recently. Per my understanding, management is very excited about the upcoming drill program. The stock retracted about 50%; it now has built a good base and is ready to move up.
There are two new names that I had positions in, or having been buying lately. Both have limited liquidity so use caution if you decided to buy. Arianne Phosphate Inc. (DAN:TSX.V; DRRSF:OTCBB; JE9N:FSE) is a phosphate play in Quebec. I got the tips from my partner Jay Taylor last week. The company has a 21% IRR and its project has a 26-year mine life and is fully permitted. Recently, shipments of phosphate from Morocco were seized by the international court. This could create a catalyst, forcing majors to invest in phosphate projects in the safe geopolitical region. DAN is on top of the list.
I had a discussion with Prize Mining Corp. (PRZ:TSX-V) CEO Feisal Somji yesterday. If you recall, Mr. Somji built and sold Rio Alto during the recent downturn of the market. PRZ is his new baby, and it is a new kid in town for junior investors. PRZ has consolidated the district of Daylight in British Columbia for the first time. The company is going to drill the high-grade targets this summer. According to the historical mining results, the chance of high-grade discoveries (30-100 grams/ton gold over multiple meters) is high. Going forward, Mr. Somji plans to do "bulk sampling" of the high-grade material starting in 2018, and send the samples to the Kinross mill nearby, which is running out of ore. This way he will be able to generate good cash flow to support building a mine there.
Biotechs are doing very well lately, "melting up" with the general market. I picked up some Sarepta Therapeutics Inc. (SRPT:NASDAQ) yesterday when it is touching the 50 DMA. I hope to flip it when it rises to higher range 35-40 area. If it can't hold 30 I may stop out.
Chen Lin manages a family fund and writes about it in the popular stock newsletter What Is Chen Buying? What Is Chen Selling?, published and distributed by Taylor Hard Money Advisors, Inc. While a doctoral candidate in aeronautical engineering at Princeton, Lin found his investment strategies were so profitable that he put his Ph.D. on the back burner. He employs a value-oriented approach and often demonstrates excellent market timing due to his exceptional technical analysis.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Chen Lin: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: OceanaGold Corp., Sarepta Therapeutics Inc., Prize Mining Corp., Arianne Phosphate Inc., Camino Minerals Corp., Scientific Metals Corp. (US Cobalt), eCobalt Solutions Inc., Clean TeQ Holdings Limited. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) Sarepta Therapeutics Inc. is a billboard sponsor of Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Scientific Metals (US Cobalt) and Prize Mining, companies mentioned in this article.