Saturday, March 5, 2016

First post on McEwen Mining [MUX]

Rob McEwen founded Goldcorp and is now the unpaid, unoptions 25% cash owner of McEwen Mining.  I like this guy's style and I agree with his assessment that this cycle will see the big players eventually become bound by all the debt they took on.  Whatever earnings they gain from future mining have already been spoken for by their massive debt loads.  Those who went PayGo and have little debt will be the big growers going forward and it will indeed result in new leaders surfacing.

McEwen runs MUX with $37mn cash and $5mn debt.  Their shares could well serve as an early indicator that the golden bull is back.  Instead of bottoming in 2016 like other gold miners, MUX actually bottomed in mid 2015 very near a long term support line.

I definitely would not buy the unicorn horn peak but after a nice pullback to perhaps $1.50-$1.70 in 3 wave I could see this as a very nice long term buy and hold.  This is for people who want big upside potential and have a 2-3 year time horizon but who do not want to trade in and out or worry about time value of leveraged ETFs.

You have to look for the 3 wave dip here and then buy it but you also have to stop out if 3 waves turns into 5 per blue below.  That would mean a more significant pullback is in the works before the next big wave higher.  But at some degree we will get a 3 wave pullback and then buy and holders can put a portion of their mining money into this one for high reward/risk ratio.  Remember, you are not buying the peak here, you are buying the multiyear dip.

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