Jim Cramer sat down with Sean Boyd, vice chairman and CEO of Agnico Eagle Mines Ltd. (AEM) during the second "Executive Decision" segment of "Mad Money" Monday night. It's a company Cramer characterized as a growth gold stock.
Boyd said after the cryptocurrency craze of the past few years, investors are once again returning to gold as an asset class. The precious metal has begun a pattern of setting higher lows with each market decline. Boyd reminded viewers that finding gold is not easy. He said the pipeline of new projects is not full and the industry isn't capable of meeting all of the demand. Fortunately, AEM did not stop investing in the downturn and they are on track for record production this year.
When asked about their success, Boyd noted that Agnico Eagle mitigates its geopolitical risk by simply not operating in countries with lots of upheaval. They also mitigate risks by using technology, including autonomous technology, to keep their mines running efficiently and safely. That's not to say Mother Nature doesn't throw curve-balls, but by managing its portfolio correctly, Boyd said, disruptions should barely be noticed.
Let's see what we can notice from the charts and indicators.
In this daily bar chart of AEM, below, we can see that prices have been making higher lows and higher highs (the simple definition of an uptrend) since early September. AEM is above the rising 50-day moving average line and the bullish 200-day line. The daily On-Balance-Volume (OBV) line displays a pattern of higher lows and higher highs the past 12 months.
A rising OBV line tells us that buyers of AEM have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is pointed down, giving a take-profits sell signal.
In this weekly bar chart of AEM, below, we can see how the recent price strength has propelled AEM above its highs of 2017 and 2018. Prices are above the rising 40-week moving average line. The weekly OBV line has broken out to a big new high to confirm the price gains. The weekly MACD oscillator is clearly in a bullish configuration above the zero line.
In this Point and Figure chart of AEM, below, we can see the uptrend and a upside price target of $59 projected.
Bottom line strategy: AEM looks a little extended vs. its 200-day moving average line, but a stock that keeps going up when it is extended or overbought is a strong stock. Go long here or add to longs when you see the Dollar Index weaken.