Again, I digress. While I DO like DRD longer term, I have been on record several times in these pages warning of one more move down for metals and miners. The small guys like TRX and DRD will get hurt the worst in terms of share prices. DRD is currently going for about $4 per share and the sideways movement of late looks like a 4th wave/reverse flag to me. A break below the blue line suggests a short term trip down to $1-$2. Say $1.50. That is where it would have done a 5th wave throw under on the large multiyear ending diagonal. If we also see a large volume spike in miners and metals going into that, ALL THE BETTER. Capitulation selling screams at me BUY BUY BUY. And if you are able to collect some of these shares at $1.50 then I think you are looking at a 10-20 bagger in the next 10 years. $5000 on this bet could return $100k. Yes, I'm serious. All you have to do is look at the longer term chart. This used to trade at $60 folks.
Trigger:
- If the shares break below the blue line, hang back and wait for the 5th of 5th to play out. It cannot be longer than the existing small 3rd wave that has already finished because the first was longer than the 3rd. So the 5th cannot also be longer than the 3rd because the 3rd cannot be the shortest. So that puts an invisible floor under the shares.
- If the shares break back above $4.44 (there's that number again), then the bearish count is off and the bottom is likely in.
By the way, I just read the transcript from DRD's recent quarterly results and it looks like they have finished putting in their new state of the art mill. The goal is to grind the ore up into very fine particles (something like 30 microns) so that all of the gold is exposed. This is supposed to have a significant positive impact on the amount of gold recovered per tonne of ore processed. This has been an expensive capital investment and because of the falling gold price the market has been in a wait an see mode on these shares. Their goal is to pay out 30% of profits as a dividend. When DRD starts paying dividends again, the market will flock to these shares because they will again have real value.
All it will take is one more good swoon for the metals and DRD will enter the river...
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