If gold and silver take off higher on another upleg very soon, as is looking more likely despite the COTs, as discussed over the weekend, then Golden Minerals is likely to perform very well. On its 6-month chart we can see that it took off like a rocket in February, and quadrupled from its January lows before settling into a Pennant consolidation that took about 6 weeks to complete. On Friday it broke out of this Pennant, or Triangle, on very good volume, which is taken to mark the start of the next impulse wave, and while it would of course be optimistic to expect percentage gains of equal magnitude to the 1st upleg on another sharp upleg, it certainly does look like it could make further impressive gains. It is in position for a big move up here, and if silver breaks out upside too, it will have the wind at its back. There are two advantages to buying it here. One is that immediate large gains are in prospect, and the other is that fairly close stops can be set to get you out for a tolerable loss if the trade doesn’t work out. Suggested position for a stop is at about $0.44.

Those who think that Golden Minerals is getting expensive after its gains from the start of the year should take a look at the long-term chart. On its 7-year arithmetic chart it is probably safe to say that we are all agreed that it is very cheap compared to its price in 2010 – 2011 when it was more than 50 times the current price. This chart makes recent gains look like nothing, and the bullish setup is not spoiled by there having been an explosion in the number of shares in issue in recent years, because that hasn’t happened – there are a reasonable 76.7 million shares in issue, of which almost 30% are held by insiders. So this looks really good with a stop here, and if the stop does perchance get triggered, we’ll probably buy it back again either at lower levels or when it comes back above the stop level. That said it doesn’t look likely that it will be triggered.

Golden Minerals is an immediate strong buy, with a stop at $0.44.

Golden Minerals website

Golden Minerals AUMN on NYSE, AUM.TSX, closed at $0.53, C$0.70 on 8th April 16.

Posted at 10.30 am EDT on 10th April 16.