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Going For Gold

11/04/04 01:26:29 PM
by Koos van der Merwe

Bema Gold Corp. is a gold exploration and mining company. Holding it looks like a good idea.

Security:   C$ BGO-T; US$ BGO-A
Position:   Hold

Bema Gold Corp. is a gold exploration and mining company. The company has producing mines in Russia and South Africa, and is developing projects in Chile and Russia. With George Bush's reelection, we can expect more of the same -- a weaker dollar -- as far as the US dollar is concerned, until the logo "Made in America" stands for lower prices and better values. The US needs to sell about $2 billion of goods more per day than what they buy from the rest of the world. This, of course, will be good for gold.

Figure 1, of Bema Gold shown below, reflects gold's move. The head-and-shoulder pattern formed suggests a target of $3.60. ( 2.79 - 1.98 = 0.81 + 2.79 = 3.60). The price rose as high as $3.22 before falling back into what could be a developing flag pattern.

Figure 1: Bema Gold. Both the lows in August and October were anticipated by sizable (or "running") positive divergences between price action and the 7, 10 stochastic.
Graphic provided by: Prophet Financial, Inc.
Should the price rise above $3.14, then it would have broken out of the pattern, giving a target of $3.77. (3.22 - 2.29 = 0.93 + 2.84 = 3.77). This target is close to the head-and-shoulders target given earlier. This would give us a profit of $0.63 (20.06%).

Wait until the share breaks above the $3.14 level, a level that will fall as the upper trendline of the flag falls over time. This is a stock worth watching.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
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Date: 11/04/04Rank: 3Comment: 
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