Agnico-Eagle Mines

03/11/15 04:28:18 PM

by Koos van der Merwe

With the price of gold having dropped as much as it did over the past year, to what extent were mines affected and is it time to buy back into them?

Security: AEM-T
Position: Hold

With the price of gold falling as much as it has over the past year, many of the mining stocks fell as well. Is it time to start buying mining stocks once again? Agnico-Eagle Mines (AEM), is a Canadian-based gold producer with operations in Canada, Finland, and Mexico with exploration and development activities extending into the United States. The company has full exposure to higher gold prices with its policy of no-forward gold sales.

Figure 1. Monthly Chart Of Agnico Eagle Mines (AEM) With London Gold Price Superimposed. Until December 2010 the stock price of AEM tracked the price of gold but after that the stock price started to fall.

Graphic provided by: MetaStock.

The chart in Figure 1 shows a monthly chart of AEM with the London gold price superimposed on it. Note how the share price of the mine tracked the price of gold but in December 2010 the price started to fall in anticipation of a fall in the London gold price in August 2011. With the London gold price bottoming at 1164 in November 2014, AEM made a double bottom at $30.96. The formation of a double bottom is a strong suggestion that the share price will rise. With the London gold price testing the $1164 per oz. level, and the double bottom made by AEM, the chart could be suggesting a recovery in the gold price, especially seeing that the share price of the mine previously anticipated the move in the gold price as shown on the chart.

Figure 2. Daily Chart With Elliott Wave Count. The share price bottomed on November 5, 2014. From that level the price rose in an Elliott wave count suggesting that it is completing a WAVE IV and could start rising in a WAVE V.

Graphic provided by: AdvancedGET.

The chart in Figure 2 is a daily chart of AEM suggesting that the share price bottomed on November 5, 2014 at $25.25. From that level the share price rose in an Elliott wave count suggesting that it is completing a WAVE IV and could start rising in a WAVE V. Should the WAVE IV bottom at $36.02 truly be the bottom, then the share price should rise in the WAVE V to the suggested target of $45.74, a 1.618 Fibonacci projection of the length of WAVE I. However, note the relative strength index (RSI) which is suggesting that the share price could fall further. The chart also shows the JM internal band. The JM internal band is a 15-period simple moving average offset by 2% positive and 2% negative. A move above the upper band suggests a buy and below the lower band a sell. The chart shows that a sell signal was triggered on March 6, 2015.

I would not be a buyer of the share at present levels. Should the share price fall further as suggested, then I would recalculate the target from the new low that forms. I would also watch the RSI waiting for it to suggest a buy. An investor, however, would wait for a new buy signal when the share price breaks above the upper JM internal band.

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
	Vancouver, BC
Phone # for sales:	6042634214
E-mail address:	petroosp@gmail.com

Click here for more information about our publications!

PRINT THIS ARTICLE

Request Information From Our Sponsors

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

Comments or Questions?	Article Usefulness
	5 (most useful) 4 3 2 1 (least useful)

ELLIOTT WAVE

Agnico-Eagle Mines

SUBSCRIBE TO OUR FREE EMAIL NEWSLETTER!

SUBSCRIBE TO OUR FREE
EMAIL NEWSLETTER!