Wednesday, March 17, 2010

Bottom Feeding Again: DRDGold

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Picked up some DRDGold (ticker: DROOY) yesterday and today on weakness and have an additional order in place to buy some more if we go below yesterday's 4.87 low. This is a trade, not an investment, and is not for the faint of heart. This company mines in South Africa and they have all kinds of chronic operational and political problems that have recently gotten worse. However, a rising bull tide lifts all boats and I like to buy on weakness, not strength. I had a previous successful trade in this stock at the end of last year and hoped I would get another chance to buy this stock back to re-trade it.

The opportunity has presented itself again, so I'm going to take it again. This is a small position and I am NOT recommending this stock in any way, shape or form. I have nothing to disclose other than the fact that I anticipate this will be a successful trade that won't take long to pay off.

This long-term weekly log scale chart of DROOY shows my thoughts and where we could be going next:

Again, this is a risky trade and I am not bullish on this company. This is simply a trade based on oversold conditions (that are likely justified by the murky fundamentals) and technical analysis. Gold stocks as a sector are acting well here and I continue to believe they are getting ready to explode to the upside.

Wish me luck...

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