Whenever the mining shares enter another rally phase I expect silver miners to out-perform the gold miners. My portfolio is overweight the silver miners (AG, SLW, CDE, HL, PAAS, SSRI. MVG) but First Majestic (AG) is one of my favorites.
In the 26 July 2015 newsletter I discussed a possible LEAP strategy for AG. I decided that at $3.50 per share it made more sense to own the stock than to purchase options. Options offer leverage but they are a burning match because they expire and lose value quickly as expiration approaches. Also, premium in the mining options is currently high.
First Majestic is buying SilverCrest Mines which gives them their sixth producing mine and another mill in Mexico. Here’s First Majestic’s press release for the acquisition. Here’s another perspective on the buyout from The Northern Miner.
AG made a higher-low last week which could be the first step in a new rally phase. The fast DEMA (double exponential moving average) is about to cross above the slower average which will gives us another bullish sign in this stock. Check out the DEMAs in this chart (8 and 20 days in length) and notice how well they mark the short-term trend. Consider incorporating the DEMAs into your trading strategy if you are an active trader.
GORO is a US-listed, producing miner and they pay a 5% dividend. At $2.50 per share it seems hard to go wrong with this stock. Based on the same rationale as First Majestic I decided to buy GORO shares instead of LEAPs. The stock based for three weeks above $2 and then made a higher-low.
SSRI is even more bullish than either AG or GORO. Remember that the strongest stocks will out-perform in the next rally.
By Bryan from pitchforkplayground.com