Eldorado Gold (ELD.TO)

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.

(Market Call Minute.) Shored up their balance sheet with the sale of China recently, but the remaining countries are Greece and Turkey, so he would prefer something else where you don’t have to worry about jurisdiction.

(Market Call Minute.) Where it is in lots of places in the world, it is problematic. With yellow flags on it, he is just going to stay away for the time being.

As much as he likes gold, this is not a company he would particularly buy, because he does not like the political risks. They have good management. His company has this as a sector perform with a US $3.25 target.

A monthly charts shows if there is persistence. Gold broke out of a downtrend this year. ELD-T is in a downtrend, but broke it recently. XGD-T is a basket so you don’t pick the wrong one.

This gold stock is not looking like a lot of the others. It is struggling to put in a base. If it breaks up through the base of about $5, it has a few levels of resistance. What is going against this is that it is not a nice clean break of a downtrend, like there is in a lot of other gold stocks and gold bullion.

Has a very small position in this. They have reached some kind of an agreement with the Greek government, so their project should proceed forward. He prefers North and South America where there are less political risks.

Thinks there have been some delays in their permitting and expects there are better gold companies. Historically they have been fairly good operators and thinks it is just the political environment in getting their permits to progress with their mines.

Stay away from commodities long term because of strength in the US dollar. From the end of July to the end of October these have seasonal strength. Because we are near the end of the period of seasonal strength, you want to be looking to take profits in these.

Have permitting problems in Greece, and this is the issue he sees with this company. Have free cash flow from the Kisladag mine in turkey, but most of the free cash flow that comes up is all going into Greece where about one third of the value of the company lies in a series of development assets. Development assets consume cash flow, which is one driver that this company does not have. Balance sheet is going to get worse as they develop these assets. Management is reasonably well respected, but the wealth creation potential rests with the Greek assets.

A lot of this has to do with jurisdictional risk. It is in China, and they may IPO those assets. Also, in Turkey and Greece. Not the ideal places to be. Big permitting risks. Has a great underlying growth potential if they could get everything permitted and spin out the Chinese assets. There are better places you can go.

Chart shows that we are at the bottom of a base channel that runs from 2013. This is a low cost producer. Have some problems with what is going on in Greece. This is not going to display any strength until gold starts to pick up, and that is not expected for another couple of months or so. He would wait until July before picking this up.

Has looked at this, but has never bought because of where their properties are. He prefers companies in South or North America. Thinks management is good. They are having a problem getting a permit on their mine in Greece. His company has an $8 target on this.

Gold does well when the US dollar is weak. We have a multi-year rally in the US$ and we having a resurgence in the US economy.

(Top Pick Mar. 14/14, Down 25.49%) We all know what happened to the golds between then and now. As long as the balance sheets are in good position he keeps these as a defense position.