This is one of my favourite stocks - for several reasons:
1. Its so undervalued compared to its contemporaries
2. Its got great projects
3. Its timing for exploration is good - its a gold boom
I was recently expecting this stock to fall to 1.1c. This was on the basis of several concerns:
1. Slow drilling schedule - which I expected to cause the stock languish - it did, but not to the extent of reaching my target - 1.1c.
2. Technical support - The strongest support was 1.1c, and I expected it to at least fall to that level for a short term before recovering.
3. Loss of confidence - I actually expected a rapid correction due to market correction. I expected this to hit explorers who are considered less tangible. The broader market did fall; though my forecast was a little 'tragic', so MGK only fell as low as 1.4c.
4. Priorities - The company continues to allocate funding to its titanomagnetite project, which I see as a long term strategic assets. This might be because it has a statutory 'minimum spend' to comply with, however I do see this project as a short term distraction from the 'greater gold' value.
5. Gold price - it started to recover.
6. End of tax year - This was the other short term negative on the stock.
In response to consolidation, and the stronger gold price, MGK share price, I jumped on the stock from last week. I was still accumulating as of yesterday. So I should at least reverse my prior negativity which was mostly short term. I have also been busy in recent times...so equities are not getting my full focus.
I cannot recall when the drilling program is due - I think around Sept 2011; however there will be short term trenching results, which will at least give some surface indicators of the tenure of the gold grades, and the lateral extent. For this reason, we might expect some short term strength. The technical resistance levels are 2.5c, 3c, 3.7c, 4c, 4.5c. It will not be a straight line.
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