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« Gold-Prices.biz: Portfolio Update 05 April 2008 | Main | Gold-Prices.biz tops 5000 subscribers! »
Thursday
Apr032008

Yamana Gold: BUY

In anticipation of a bounce in the price of gold and a possible short term rally we decided to BUY Yamana Gold Incorporated today for an average price of $14.43 and we are hereby signalling a BUY on AUY for a short term trade.

Yamana Gold: Buy

We originally bought AUY at $9.37 and again increased our position on the 7th December 2007 at a stock price of $12.89. We sold 50% of our holdings at $16.50 on the 31st January 2008 and we have now bought back these shares at $14.43 just miniutes ago.

Our take on the situation now is that Yamana Gold has been oversold and as such presents us with a reasonable buying opportunity. Yamana has traded as high as almost $20.00 but the recent pull back in the price of gold has sent Yamana tumbling by about $6.00 to trade in the region of $14.57.

This company has a market capitalisation of $5.18 billion and a P/E ratio of 46.93, by comparison, one of our favourites, Agnico-Eagle has a P/E ratio of 66.21. Kinross Gold, another favourite, has a lower P/E ratio of 55.03, but does not appear to be as oversold as Yamana, so today's move has been to increase our exposure to Yamana.

Taking a quick look at the chart we can now see that AUY appears to be oversold and is trading closer to its 200dma than it has done for some time. Keep an eye on the MACD where we want to see the black line on the MACD crossover the red line in an upward motion. This is sometimes referred to as the golden cross and is usually positive for a stock.

Yamana Gold trades on the NYSE under the symbol of AUY and on the Toronto Stock Exchange under the symbol of YRI.

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For the more conservative investors you might want to take a look at Doug Casey's Big Gold, just click here.

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Reader Comments (5)

Bob,

In my opinion, Yamana dropped more than the peers or at least it started earlier. Wonder if it has anything to do with the (below market price) mini-tender offer.

http://biz.yahoo.com/iw/080326/0380228.html

I do hope that Yamana goes up from here.

Disclosure: I bought YRI on April 1. Hope it doesn't turn out to be a fool's act. ;>)

ep

April 3, 2008 | Unregistered Commenterep

The article says:

“The offer price of C$15.75 per common share represents a 1.87 percent and 1.68 percent discount, respectively, to the C$16.05 and US$15.70 closing prices for Yamana common shares on the Toronto Stock Exchange and the New York Stock Exchange”

As we bought for US$14.43 we are comfortable with this offer.

April 3, 2008 | Unregistered CommenterGold Prices

ep, Yes indeed, buying on April Fools Day did cross our minds! nice one!

April 3, 2008 | Unregistered CommenterGold Prices

Hi Guys!
How about LSE: HOCHSCHILD MINING?. I see you are not following it, but any hint about the prospects?
Congratulations for the 5000 fans!
regards

April 4, 2008 | Unregistered Commentertoni

NICE , I had come up with the same line of reasoning and posted on the article GOLD:YOUR DAY JOB CAN WAIT. You can also see that a parallel line can be drawn across the 'tops' or 'peaks' of July '07 Nov 07 Jan 08 and March 08 too , and forms a perfect channel back up into the $20's if this one really gets going! For now, one step at a time , and ride it if the volume comes in after major buying starts. thanks for the visual!!

April 4, 2008 | Unregistered CommenterRobert

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