Jubilee Metals Analysis: Incoming price correction (Dec 2020)
I made reference to Jubilee Metals in my analysis titled 'Why Precious metals streaming and royalty companies make sense' as a "...speculative play in precious metals scrap recovery/conversion to sellable products".
This company is on my watchlist for so many reasons, chief of which are:
- From fundamental perspective, the Kabwe mining license (Zambia) extension in September 2020 is good for the share prices. This is the latest in a series of good news for the company since the restarting of operations in South Africa (April 2020).
- From the monthly chart, prices are at rock bottom from the alt time high, and starting to incrementally climb back up. This presents great opportunity for value-investors.
As at today, 27 Nov 2020, price has formed a structure level (8.50 - 8.80 zone). As reflected at this level, MACD cross-over is about to occur. Analysis of historical price behavior at such MACD level reveal the following:
- 06 Mar 2017 - 19 May 2017: 40.88% price drop
- 04 Aug 2015 - 10 Sep 2015: 49% price drop
- 14 Sep 2012 - 04 Dec 2012: 44.5% price drop
- 04 Feb 2004 - 25 Feb 2004: 20.59% price drop
- 23 Sep 2003 - 17 Oct 2003: 31.58% price drop
The average drop using the limited sample size above is 37.31% drop in price (based solely on random MACD behaviour from the level attained on 27 Nov 2020). Therefore, we can conservatively expect a price drop of around 20-30% going into December 2020. Furthermore, it is a sound assumption that investors might start to take some profits off the table as we approach December holiday season. This will further put pressure on the price of the stock. In my opinion, this a great opportunity for those who have been sitting on the sidelines with cash to get in at a good price after the expected price drop.
This company is on my watchlist for so many reasons, chief of which are:
- From fundamental perspective, the Kabwe mining license (Zambia) extension in September 2020 is good for the share prices. This is the latest in a series of good news for the company since the restarting of operations in South Africa (April 2020).
- From the monthly chart, prices are at rock bottom from the alt time high, and starting to incrementally climb back up. This presents great opportunity for value-investors.
As at today, 27 Nov 2020, price has formed a structure level (8.50 - 8.80 zone). As reflected at this level, MACD cross-over is about to occur. Analysis of historical price behavior at such MACD level reveal the following:
- 06 Mar 2017 - 19 May 2017: 40.88% price drop
- 04 Aug 2015 - 10 Sep 2015: 49% price drop
- 14 Sep 2012 - 04 Dec 2012: 44.5% price drop
- 04 Feb 2004 - 25 Feb 2004: 20.59% price drop
- 23 Sep 2003 - 17 Oct 2003: 31.58% price drop
The average drop using the limited sample size above is 37.31% drop in price (based solely on random MACD behaviour from the level attained on 27 Nov 2020). Therefore, we can conservatively expect a price drop of around 20-30% going into December 2020. Furthermore, it is a sound assumption that investors might start to take some profits off the table as we approach December holiday season. This will further put pressure on the price of the stock. In my opinion, this a great opportunity for those who have been sitting on the sidelines with cash to get in at a good price after the expected price drop.
