Lithium Stocks: Close to a Fresh Run?

Lithium has been quite hot this year and the juniors in the sector have ripped. Do I think it is the flavor of the day so to speak? Yes. I am not a long term investor with much money exposed to Lithium plays. However, there is more room to run before implosion, which might be later this year but…not yet. To the contrary, all of the lithium junior stock charts are perfectly setting up for a fresh run to new highs starting as soon as this week potentially. Premium GIL members caught the low risk set up in Lithium X Corp (LIX.V/LIXXF) in March. I recommended it at $1.15 on LIX.V and we flipped it in the high $1’s in just over a week for a 60% plus profit.

LIX.V is one of the more liquid/established/well backed plays out there. If you can buy a position up to $2.10 CDN or $1.65 on LIXXF, go for it. This could be good for 30-40% in the next 2-3 weeks as LIX.V tests previous highs and/or breaks to new highs in the high $2’s-$3 per share. It is a good set up right here because it has had a 4 week consolidation, RSI has cooled, and MACD is about to turn up. Give stop limits a little room and to be more conservative, buy half now and add another half at $1.65-$1.80 if it has another week consolidating. I doubt it, but it could.

Another strategy is to buy here while the uptrend is intact (upward slanted blue line on the chart below….needs to close above this to keep its perfect uptrend in place) but stop out if it goes below the rising blue line, OR if it breaks the 50 day moving average. Personally, I added half on Friday and will add another chunk if it pulls back 15-25 cents early this week. If it falls below the 50 DMA, I’ll stop out of the trade altogether for a small loss.

Chart 1

Same goes for Lithium Americas Corp (LAC.TO/LACDF) which is established and liquid. Buy up to 75-77 cents on LAC and 60-62 on LACDF. The sector will move together more or less but these two are the top juniors in the space. Another run is very likely coming, I just don’t know if it’s this week (70% chance), next week (20%) or (10%) that I’m wrong on it altogether!!

On LAC you can use where the straight line and 50 day moving average converges as strong support. If it were to break and close below both, I would sell it. However, I bought a 2/3 position on Friday and would add the last 1/3 if we see the slight pullback early this week to the mid-high .60’s.

Chart 2

MACD is still above zero on LAC/LIX and are likely about to turn up. If/when the green lines at the bottom right on the charts break through the red lines that is when the breakouts will begin to accelerate. We should see a 30% plus move on LAC as its first stop will be retesting the $1 previous high. For me, I’ll probably sell half of the positions when both stocks are testing previous highs, which should provide some resistance. I think they will break into new high territory but because these are trading positions for me, I am not interested in being greedy. There is 30% plus on the table realistically within a few weeks, which isn’t bad!!

I also tried to dig up a “tiny cap” Lithium play that has the potential to provide even more significant upside than LIX/LAC. I ended up finding a very sweet looking chart in Ultra Lithium (ULI.V/ULTXF). This one is thinly traded so be careful. But if the Lithium sector as a whole turns higher as I predict, this one could double or triple pretty quick. It’s at 25 cents and 50 cents would be my guess as an easy target.

Chart 3

I’m not bothering to get into the fundamentals of each company or the Lithium space. Why? Because it doesn’t matter. The sector is rising on market momentum and excitement at the moment and all companies involved in Lithium have been running in 2016. I understand the basic bullish premise about the scarcity of Lithium and Tesla as a market driver. However, after the run will come a crash, as happens with every move similar to this one.

The action reminds me of graphite stocks in 2012 and rare earth plays in 2010-11. I’m all for taking some money out of the run but I have not dug deep enough to be compelled to get heavily involved in Lithium. My picks today are exclusively based on technical action, which is still very bullish. Markets like this that end up generating lots of momentum and hype, can keep going for a while. I don’t think they are done yet, thus my bet on a fresh leg higher.

I am long LAC, LIX, and ULI. I may buy more or sell at any time without notice.

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Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. This publication is a 100% subscriber supported. No compensation is received by the author from any of the companies mentioned for the recommendation of a stock in this service (if this changes or there is exception-it will be clearly disclosed to our readers). Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Chat with Rob McEwen of McEwen Mining

One year ago in May 2015, I initiated coverage on McEwen Mining (NYSE: MUX) (TSE: MUX) at $1.09 per share with a strong buy recommendation and a 12-24 month price target of $3 (speaking in terms of USD MUX on NYSE). You can read the report here.

The share price has gone up by 150% and closed today at $2.53. During my webinar below, which Rob and I recorded today, I raised my price target to $10 per share by the end of 2017. I will be walking through more solid economics in my next report but we did some back of the napkin tabulations on the webinar. Rob demonstrated that when all categories of reserves are measured, and including their copper monstrosity that is Los Azules, MUX owns 46 Million ounces of Gold equivalent ounces in the ground right now. Stick that in your pipe and smoke it! In the report from May 2015, you’ll see a 10 year chart showing 3 major bottoms and two major tops since Rob took over UXG (now MUX). The 3rd top will be hit again, and it also will likely be breached. The price has twice hit $10 per share when MUX wasn’t nearly as established. Rob McEwen has put $127 MM of his own cash in MUX to acquire his 25% equity ownership position. His only reward in building the company is share price appreciation as he takes no salary, no options, no bonuses, etc. His personal cost average is just under $2 per share. We can buy today just 20% above his cost basis but he has been busting his hump building value in the business for well over a decade, we just press the “buy” button. Enjoy the 45 minute or so webinar for yourselves. The camera didn’t zoom back and forth to who was speaking so you’ll have to look at my mug throughout! Or better yet, just turn up the volume and listen versus watch….it’s just a talk/Q&A.

Eric owns shares in MUX and may buy more or sell at any time without notice

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Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. This publication is a 100% subscriber supported. No compensation is received by the author from any of the companies mentioned for the recommendation of a stock in this service (if this changes or there is exception-it will be clearly disclosed to our readers). Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Oban Mining: An Aggressive Gold Growth Story

Oban Mining (OBM.TO/OBNNF) is in a strong position, cashed up to the tune of $75 million. Management is one of the more aggressive that I’ve seen and they’ve done 14 transactions since 2015, gobbling up juniors and taking stakes in others. All of that activity in the depths of the gold bear market may pay off in a huge way and Oban seems to have the team to create a giant. Management calls this the “Next Osisko Mining Corp”, where most of the crew came from after Yamana and Agnico Eagle bought them out for nearly $4 Billion in 2014. The team at OBM has cumulatively discovered over 100 Million ounces of gold in their careers they reckon. That’s a lot of gold!

The company already has 5.5MM ounces of gold in all categories in Quebec and Ontario, Canada. Prolific drilling will occur in 2016 with over 100,000 meters of drilling programs planned, so news flow will not be weak. The company has some players involved on the board and in the stock. Osisko Gold Royalties (separate company from the mining corp bought out/referenced earlier) owns just under 20% while Wexford, Dundee, and Sprott combine for another 15%. The only negative I see on the surface is that officers/directors own less than 4%, which in my opinion is nominal. But, it’s not nothing.

I see the company as large shareholders in plays I like. One example is Metals Creek Mining, which OBM owns a big chunk of and will very likely buy out at some point. This gives them a solid presence in an attractive camp like Timmins and I see their resource base really flourishing in the years to come. Management knows how to build a mining company and they’ve done it before. Discoveries are inevitable with that quantity of drilling as well so I expect big spurts of enthusiasm in the share price this year.

chart 1
It looks like we might be chasing the stock but it has “only” gone up 50-60% this year versus many of our favorites having already doubled tripled, and quadrupled. Plus, it always helps to take a step back and look at a longer term chart, here’s the weekly going back to 2014:

chart 2

This bad boy is just getting started! Since we’ve just broken through the 50 week moving average, I expect the short term to be quite strong for OBM. Look at GDXJ as a comparison on the weekly:

chart 3

The sector is more closely challenging their 200 week moving averages so Oban has some catching up to do. As long as they don’t announce any huge acquisitions the next couple of months, the share price should outperform the sector. Acquisitions are great but you need digestion periods to integrate and also slow down issuing shares. Oban has done a good job though and proof is their huge war chest post 15 deals.

My first target for OBM.TO is $2.50-$3…..closer to $3. Then $5 will be next so we still have room for a triple within 12 months. I’m initiating a strong buy on Oban Mining at $1.59 with a 6 month price target of $3 and 12-15 month target of $5. This is a newer player on the block but could become a darling to institutional investors because they are liquid and will be a several hundred million dollar cap soon. If management pulled off another Osisko, we’re talking 18-20 bagger from here. In this new bull cycle, anything will be possible in time for capable companies that execute and aim big.

Here’s a quick plug from management themselves:

I’m long shares in Oban Mining and may buy more or sell at any time without notice.

For updates on Orban Mining and unique ideas on individual mining stocks, please sign up for our free newsletter below.

 

Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. This publication is a 100% subscriber supported. No compensation is received by the author from any of the companies mentioned for the recommendation of a stock in this service (if this changes or there is exception-it will be clearly disclosed to our readers). Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Southern Silver Exploration Corp: Deep Value and Big Upside

Southern Silver Exploration Corp (Canada: SSV/ US OTC: SSVFF) is a junior exploration company that owns significant Silver assets at their Cerro Las Minitas project in Mexico with its partner Electrum Group Holdings. Electrum is owned by billionaire mining entrepreneur and investor Dr. Thomas Kaplan, which owns over 45% of SSV. Over 70% of SSV shares are owned by management, insiders, and institutions.

I’m issuing a strong buy recommendation on SSV at 14 cents Canadian. I believe the share price will triple or more to 45-50 cents within a year, and possibly by the end of 2016. This is a real gem and the current valuation under $10 million, is WAY too low for a company with proven 43-101 reserves of over $1.7 Billion. Not only that, but the drilling program in motion now being operated by Electrum, should double the resource with infill drilling. This would bring the in situ value to somewhere around $3-3.5 BILLION, mostly in silver.

They have already proven up 100 million ounces of silver with 200 million being the goal by year end, yet we have a $10MM market cap? Crazy. 10 years ago, the stock hit a high in May 2006 of $13.30 per share. Now it is 1% of that. But, much work has been done in this decade and this stock will shine once again in this new silver/gold bull cycle. I’ve been searching for a very strong silver junior story to get behind and this is the one to make a core position.

Management were behind discovering the Penasquito mine in Mexico over a decade ago. They did this through Western Silver Corp, which was bought by Glamis Gold for $1.2B (Glamis was bought by Goldcorp). Penasquito produced over $1.6 billion worth of gold in 2015 and has over 17MM ounces of gold in the ground and over 1 BILLION ounces of silver. I bring this up because management launched SSV and acquired the Cerro Las Minitas project to duplicate their success with Penasquito.

Now, we step in 10 years later after a brutal bear market in gold/silver miners and can buy in at $1 per ounce of silver in the ground, soon to be even cheaper after the current drilling program. The stock has been climbing steadily since late February:

chart 1

However, it is not overbought and is still dirt cheap. Check out the ten year chart below, which shows that an initial bounce to the bottom blue line should be the first major benchmark (50 cents). After that, I see $3 longer term.

For now, it is a no brainer to accumulate up to a $15MM market cap, which is 20 cents or so. Definitely shares can be gobbled up to 16-17 cents all day then on any pull backs at all. The float here is tight due to the 70% insider/institutional ownership led by Electrum Group.

chart 2

If you do some research on Thomas Kaplan, even though he is not a household name, you will see that the guy DOES NOT MISS. He is a legendary mining investor, entrepreneur, and operator that founded from scratch then sold Apex Silver and Leon Exploration for billions each. He is the Chairman of Novagold and the bulk of Electrum’s investments in 8-10 mining companies is his personal wealth.

We can piggyback on significant due diligence by one of the best and most successful in the mining business. In addition, the team has discovered numerous future mines, several of which are monsters. 50 seconds into the short video below lists the discoveries..…check it out:

I suggest GIL readers take a position in SSV. Canadian investors can safely buy up to 20 cents for a long term position. US investors can buy SSVFF up to 15 cents. Now, for those of you that are accredited investors ($200K annual income and/or $1MM net worth), for those that act quickly, you might be able to invest in the company’s current private placement at a dime. Not only is it an immediate 50% profit compared to the open market price, you get a full purchase warrant good for FIVE years at 15 cents per share.

Issuer Direct is the platform in which to express your interest, it just takes a minute to register then someone will contact you with details/documents/wiring instructions. There is also a current power point from the company and other comments that may be of interest to all investors. Click here.

For those that can take action and are accredited, the private placement is a no brainer. However, it is almost fully subscribed and is filling up fast. There is about $200K or less left of the $1MM being offered. I am investing in the PP personally and via my corporation, Phenom Ventures LLC.

I’m initiating coverage of SSV at 14 cents and am starting with a 45 cents per share 12 month price target for aggressive investors.

For updates on Southern Silver and unique ideas on individual mining stocks, please sign up for our free newsletter below.

 

Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. Southern Silver is a sponsor of the Gold Investment Letter and we are being compensated $2,500 monthly. I am also the owner of Issuer Direct and will be receiving compensation in the form of a finder’s fee for investors referred to invest in their private placement.his publication is a 100% subscriber supported. No compensation is received by the author from any of the companies mentioned for the recommendation of a stock in this service (if this changes or there is exception-it will be clearly disclosed to our readers). Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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