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« U.S. Bancorp PUT Options Up 45% in One Day | Main | U.S. Bancorp Fit to Drop »
Monday
Aug102009

Randgold Resources Limited An Entry Point Approaches

Randgold Chart 11 August 2009.JPG



Randgold Resources Limited (GOLD) is shaping up well as its stock price heads towards what might just be a wonderful buying opportunity.

From the chart above we can see that Randgold is heading towards its 200dma and the RSI is heading towards '30' which is where we would like to see them before re-purchasing this stock. You may recall that we bought Randgold on the 18th of June 2008 for $37.65 and sold them recently for an average price of $68.69 for a return of 82.44%. We then took an aggressive stand and bought PUTS on Randgold which we held for one month and then sold them for 100% profit. So Randgold has been good to us.

The next few weeks should see an end to the consolidation in the precious metals sector as September onwards usually brings a rise in gold prices and Randgold tends to react in a fairly dramatic style. The volatile nature of this stock also makes it a prime candidate for a 'pop' at the occasional options trade.

So, summer doldrums or not, stay awake and do your homework, setting the targets with which you are comfortable in advance. Something that we are not good at but thats no excuse for you!

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Have a sparkling day.

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Reader Comments (4)

You've been pretty accurate with your entry and exit point for Randgold in the recent past but I would be very surprised if the stock hit the 200 day moving average in the near future. It's already down below 20% on the slow stochastic which is usually the point from which a stock rebounds. For it to hit your entry point, gold would have to be hit pretty hard within the next few days. Let's see how it plays out.

August 11, 2009 | Unregistered CommenterPaul Dransfield

Paul,

We take your point, however, we don't expect Randgold to go from where it is now directly to the 200dma, there will be a few oscillations on the way and it may take a little longer than a few days. But we will watch it closely for a suitable entry point and would ask that you tell us when you think that point has arrived, the more opinions we get the better for our readership and ourselves.

August 11, 2009 | Unregistered CommenterGold Prices

I am not surprised if Rangold drops below $50 in the next few months. I am not saying it will.

August 14, 2009 | Unregistered CommenterEP

I've been watching a few - and trading one in particular - mid-range gold stocks for quite a while now and found that when the 20% point on the slow stochastic is penetrated, a reasonable bid below market will usually be hit during a final spike down. It doesn't always happen but it usually does. From there the stock will invariably rise to at least the 50% - and often the 80% - level fairly quickly for a 10 - 15% - 20% gain or more. Take a look at Kinross and IAMGOLD for better examples. I now expect GOLD to penetrate the 50 day or higher before correcting again. If at any time the gold price takes a major hit, all bets are off, but bear in mind that those hits usually follow the same pattern.

August 14, 2009 | Unregistered CommenterPD

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