Taking a victory lap -- we noticed the positive technical conditions for gold and gold miners back in early December. Subscribers who followed the recommendations and avoided leveraged plays should have done very well. We have tried to avoid low-priced speculative names, but I want to talk about one speculative name -- Golden Star Resources (GSS). This is not meant to be an outright recommendation for GSS, but to prepare your mind for what could lie ahead. The precious metals world is fairly small and if a lot of money gets pushed at it in a short period of time, we will probably see more stocks in this space "going vertical."
In this short-term chart of GSS, above, we can see that in less than two months GSS has soared to 55 cents from 15 cents! Impressive.
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Looking at the price action of GSS in this longer-term chart, above, we can see that dips under 25 cents have been bought during the past year. Prices are above the 40-week moving average. The On-Balance-Volume (OBV) line is rising and the Moving Average Convergence/Divergence oscillator is positive. The next resistance on GSS is not until the 75 cents area. Wait a minute. Don't switch your screen over to your online brokerage account to buy GSS. The real reason for this update is to get you to think about this small part of the equity market. Soaring speculative names are usually a sign of a frothy market but because there are so few opportunities in this space, I think we will see more of this happening and it won't be a sign of a top. Yes, gold could have some setbacks, but it trades strong as minor corrections have been intraday or just sideways. Gold could be the big surprise market of 2016 and 2017. There's still time to drill down and find the best plays.
