Opinions
Jon Vialoux
Eldorado Gold
ELD-T
COMMENT
Aug 10, 2016
Stock price when the opinion was issued
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Not shorting any gold right now. Stock's run well ahead of the group, so he's not as enamoured with this name. He'd look at B2Gold. For domestic, he'd take Detour Gold. Gold is the default winner in the face of US debt putting pressure on the dollar, and will probably be higher in 6 months.
Sell Telus and buy Eldorado Gold? They're totally different companies, different stories. Can't compare them. Eldorado's valuation is extended, so he'd look elsewhere. Stick with telecoms, which pay decent income and offer decent growth. People are using more bandwidth. Infrastructure and telcom stocks have been overlooked as investors have chased the tech high-flyers.
Premium contentPremium contentPremium contentDoesn't own either. Kinross has historical issues trying to right the ship, doing better recently.
For ELD, a very high 60% of NAV is exposed to development risk. Recent mine is financed and built, but there's still execution risk. Trades at a discount on geopolitical risk too.
His preference is AEM, with one of the best teams and one of the best executions he's seen over the last decade.
Premium contentPremium contentOur PAST TOP PICK with ELD has triggered its stop at $13.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 19%, when combined with our previous recommendations.
Gold miners have a seasonal run between the end of July, all the way to the beginning of October. A better way to play this is through the ETF GDX-N, which is a broad basket of all of them. Eldorado is not performing as well as the broad group of miners. The chart shows a bit of underperformance against the market, and momentum has actually been diverging from price. Chart shows a double top. If we get a break below $5.16, the double top would suggest another $1.50 below that.