Buy Alert Issued for Gold Miner
One area of the market that has outpaced most industry groups is gold.
Yesterday, gold hit a new high of $1,309 an ounce, as investors buy every dip
in price for the precious metal. My target of $1500 remains unchanged, that's
15% upside.
The reasons for gold's popularity are clear. A weak U.S. dollar, a promise of
more monetary stimulus from the Fed and an uncertain outlook for the U.S.
economy, along with currency weakening moves from Japan and England, have
sent investors clamoring for an asset that can protect the value of their
wealth.
Current conditions underlying gold's rise are not likely to end anytime soon.
And now, gold mining companies are starting to acquire other miners to
maximize their profits from high gold prices.
One stock caught up in the bidding battle is Capital Gold. CGC is up over 20%
in two days on high volume. With a forward P/E of just 11, it's clear that
the offer was too low. And investors agreed, sending the stock higher in
anticipation of a higher bid. Currently trading around $4.80 a share, a
reasonable offer for this company, which has one of the lowest cost
structures in the industry, could be as high as $6.50. That would represent
another 35% gain for investors. We have owned this stock in the past, and
reviewed it in videos. Owners of the stock should not look to sell and those
looking to enter a new position can look to buy near $4.50. Shares should
take out $5 before a larger pull back occurs, with $5.40 my short term
target.
Capital Gold has recently breached $4.01 resistance on
higher volume
In the chart above, shares have moved 40%
higher over the past three weeks. This week CGC took out resistance near $4
on higher than normal volume. The move took the stock to higher highs and is
up 20% this week.
Shares encountered resistance near $5, but volume has dried up. The lack of
selling indicates more highs on on the way. The stock is building strength
for a move that will take it above $5 and to my target of $5.40. A great
time/place to buy is near $4.50 on a light volume decline. This stock and
gold have been reviewed in my TradeMaster
Daily Stock Alerts service. My last pick is up 3% today and has 27% left to go, to find out
what stock it is Click
HERE.
