Golden Star Resources (GSS) proves two things for investors in the junior gold mining stocks –
Fundamentals don’t really matter, if the market alongside spec fever gets going they’ll bid any old stock up (and vice-versa), and
When dealing in junior mining stocks you must spread your money around, we’d advise in at least 5 stocks if not 10 (there are a lot of GSS holders that are fuming because a) most of their money is in this one stock and b) it's been going down when Gold has been going up!
If we look at the 5 year chart of GSS you can see it had a great run when speculative fever in that sector was boiling a few years back. Since then it’s done nothing even though the price of Gold has been on a power run over the last 6 months or so.
But if Gold is going to continue going much higher (which we believe it is over the next several years) all Gold stocks won’t be able to stay subdued forever.
For this reason GSS looks like a good speculative buy if you like a punt. Personally we’re not going to do anything at these levels but reckon there’s a load of stop losses building up below the critical $2.00 level. If those stops ever get hit then we’ll certainly be adding it to our portfolio at sub $2.00.
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