Stock picking South African Miners

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Stock picking South African Miners

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Published Date: 2021-02-26 | Source: INCE|Connect | Author: Lester Davids | Peet Serfontein | Mark Weetman | Unum Research

Stock picking  South African Miners

The JSE Gold Miners Index

The local Gold miners index is lower, month-to-date, off by 12.63% and lower by over 48% since it's most recent multi-year peak of August 2020. Our expanded technical view, utilizing the monthly chart, notes the price continuing to trend toward the (1) medium term break of April 2020 which coincides with the (2) prior multi-year supply zone which was existed from June 2003 to December 2011.


Medium-term investors could bear in mind the support zone between 2957 and 3315 as a provisional accumulation level, provided we see early technical evidence of support by way of a positive candle structure on the lower time frame.
Medium term traders would also require an increase in volume to support a reversal at or near support.

What are the Major and Junior miners?


Majors:

Established miners with operations in multiple locations, decades of history, world-spanning operations.
Controls the vast proportion of global supply.
Less volatile, has the capital cushion to finance further exploration.

Juniors minors
  • Less capital.
  • Riskier ventures.
  • Found in commodity exploration, such as oil, minerals, and natural gas.
  • High risk, high return.
  • May be bought out by a major if operations show signs of success.
  • Equity holder risk: higher risk of share price decline if feasibility study is negative. Often the share price will appreciate in the run-up to the study.
On a long-term relative basis, although both indices are substantially down, you would have been better off holding a basket of Major miner's vs a bask of smaller producers.


Let's have a look at some short-term trade ideas:


Trade idea #1: Sibanye Stillwater (SSW)


Trade idea #2: Gold Fields Ltd (GFI)



Trade idea #3: Exxaro Resources (EXX)




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