Today we acquired the stock of gold producer Randgold Resources Limited for an average price of $37.65 per share, having stated our intention to acquire this stock on
June 3rd, 2008, in an article entitled, Randgold Resources Limited: Prepare to Buy!
On June 3rd, 2008 we wrote the following:
“We have watched this stock for some time hoping to identify a suitable entry point but for various reasons we have not made a purchase. However, we could see two factors conspire to present us with a bargain buying opportunity; firstly the summer doldrums are now upon us and secondly Randgold’s share price is deteriorating.”
As we can see from the chart the stock has continued to deteriorate and broken below its 200dma and now sits some $18.00 below its peak of about $55.00. This stock may decline some more as the summer season would appear to have rendered gold directionless. However we believe that the downside for Randgold is limited, as the majority of the damage has been done. This is our first purchase of this stock and should it continue to fall we may well become buyers again, a lot will depend on the performance of other gold producers and whether they represent better value or not. We must also keep one eye on the possible re-emergence of the credit crunch, adjustments to interest rates and the progress of the US dollar, not to mention the price of oil and the political situation in the Middle East.
Randgold Resources Limited trades on the London Stock Exchange under the symbol of RRS and on the NASDAQ under the symbol of GOLD.
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