Randgold Resources Limited: As Good as it Gets

In mid June we showed this chart of Randgold Resources Limited (GOLD) and commented that the yawning gap between the stock price and the 200dma suggests that this aberration cannot remain as is and either the average has to move up or the stock price has to move down in order to return to the ‘norm’. A correction of around $10.00 was anticipated and so we purchased PUT Options on Randgold which is now history.

Fast forwarding to today we can see that Randgold has come some way to correcting this aberration as the stock price is now only about $7.00 higher than the 200dma whereas before it was about $28.00 higher as the 200dma stood at $44.00 and the stock price at $72.00.



So the question is: Is it a buy yet?

Well, we have conflicting signals as the trend is still down from the June peak but the MACD is showing a golden crossover and it is in oversold territory so there is still plenty of space above for it to rise a little further. We had hoped that the stock price would indeed take tea with the 200dma and then bounce off it and put in a rally. However we cant always expect to get a perfect set up every time which would provide us with a reasonable level of confidence to make a purchase.

On balance we think that this may be as good as it gets for Randgold and that a purchase here would prove to be a profitable one, however we are looking for an absolute bargain and have chosen to wait a little longer. This decision is not unanimous within our team so as always the final decision is yours and yours alone to make.

If we do decide to make a move either with a purchase of the stock or an options trade we will of course let you know immediately. If you decide to go ahead now then please let us know how you get on.

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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Comments

[Mark]

Still have a few $55 September PUT options on Randgold (GOLD) and am watching closely. GOLD still may come down to the 200DMA, although not a guarantee. If it hits the $55 level, all is well, if it doesn't, c'est la vie and on to the next one.
Seasonally, September is a tough month. I expect some volatility and some standard head fakes. Upon reviewing the futures market data, I am looking to mid-October for some bullish activity in gold. caveat emptor!
Regards,

[John Ell]

For what it is worth, I just read a commentary about the month of September being a good up month for gold. But, who really knows what is going on in this socio/economic struggle? I wanted to lighten up on gold stocks but now I am not sure.
J.

[Mark]

Comment to John,
When commenting on September, I should have stated more clearly that I was referring to the overall market and not Gold specifically, sorry.
I believe Gold will meander along here, until mid-October (based on futures data), again, this is only my opinion and I'm looking extremely short term regarding my PUT options on Randgold.
I am also a longer term investor and I will be holding on to my gold/silver based stocks for what's setting up to be an eventual breakout.
Cheers,

[Gold Prices]

Randgold is up 10% today so we need to take care at the moment, but this could be the start of something big but not without a lot of volatility along the way.