Gold miners are in great shape right now, and it might only get better. We suggested 2 explosive gold positions in this week’s Momentum Investing alert. However, one less explosive but certainly interesting gold stock is Royal Gold (symbol RGLD). It is a large cap gold streamer, with a short float ratio of only 3 pct. It has great financials, a great outlook and a great chart. There are even better opportunities in the gold market currently, but RGLD certainly qualifies as a relatively low risk play with an average reward.
It does not happen often that we feature a specific stock in the public domain.
Royal Gold however has a beautiful textbook setup, and that’s why we share it in the public domain. It has a characteristic that we absolutely love, and that we continuously look for (throughout the 1,000 charts we revise every week).
As per Tsaklanos his 1/99 Investing Principles it is only 1 pct of price points on a chart that do matter. Royal Gold is a textbook example of this.
Two weeks ago RGLD tested a level that qualifies as that handful of price points on a 10 year chart that has an extremely high level of relevance: 100 USD.
Now it more of a coincidence that it is a rounded number.
But the fact of the matter is that 100 USD was all-time highs back in 2012. It took RGLD from September 2012 till July 2019, 7 full years, to get back to that price level. Only once, in June of 2018, did price come very close to test 100 USD but it was not successful testing it (certainly not breaking out).
Last week RGLD tested 100 USD, after last year’s breakout, and guess what: exactly at 100 USD it bounced higher.
It is absolutely gorgeous when an analyst sees a stock successfully test a level that was a major peak 8 years ago. It is the ultimate confirmation of a reliable outcome.
We believe RGLD is going much higher in 2020.
Even though RGLD is a great opportunity we believe there are much better opportunities in the gold market. One opportunity is an aggressive breakout play, and the other one is a secular breakout play.
