Clive Maund - Thu, Apr 5, 2018

Cheap Gold Royalty Stock Under Persistent Accumulation

Technical analyst Clive Maund looks at a gold royalty company that he believes will take off when the gold bull market gets underway.

Terraco Gold Corp. (TEN:TSX.V; TCEGF:OTCPK) has three big and important things going for it. It is cheap, under accumulation and gold will soon enter a bull market. Because it is a royalty company it should perform royally when the imminent gold bull market gets underway.

Just how cheap it is historically we can see to advantage on a long-term 20-year chart, since it got to about C$1.30 way back in the year 2000. On this chart we can also see that it has been under persistent accumulation for years now, not that this has done anything for the price—yet. However, when you see persistent accumulation like this, especially when it intensifies as shown by a steepening Accum-Distrib line, then the chances of a bull market getting under way are correspondingly increased.

Zooming in on a 3-year chart, we see that the latest major downtrend in the stock started in the middle of 2016 and is still in force. However, the current low price, continually advancing Accum line and the increasing bunching of the price and moving averages are increasing the chances of it reversing to the upside soon. It is therefore interesting to observe on this chart that every time the price gets down to 8 cents, someone, or something, buys it, and this has been going on since October. Now we will look at this in more detail on a 1-year chart.

On the 1-year chart we can see a remarkably sharp line of support at 8 cents—it does not cross this line because all stock that becomes available at this price is automatically bought up. It takes considerable financial clout to do this for months on end with a stock that has 146 million shares in issue, so clearly whoever or whatever is doing this has strength and can be presumed to be doing it for a reason. As speculators we don't care what the reason or reasons are, all we care about is that it goes up after we buy it, which this determined buy program suggests will happen sooner rather than later. So all we have to do is show up and buy the stock above the program buy level, i.e., above C$0.08, otherwise the big buyer will elbow us out of the way.

Terraco Gold is a strong speculative buy above C$0.08—anywhere between C$0.08 and C$0.10. Buyers should note that some patience may be required as the price could track sideways for another few months maximum to allow the upper channel boundary shown on the 3-year chart to drop down closer to the price. That said, any such patience should turn out to be well rewarded when it does get moving. Terraco trades in horribly light volumes on the US OTC market, where for this reason it should be avoided. There are 146 million shares in issue.

Terraco Gold website—it's worth visiting the website if only to see the big trucks.

Terraco Gold Corp. TEN.V, TCEGF on OTC, trading at C$0.09, $0.065 at 10.06 am EDT on 5th April 18.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Terraco Gold. Click below for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Terraco Gold.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Terraco Gold, a company mentioned in this article.

Charts provided by the author.

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