No Shine for Gold Company

Sep 10th, 2008 – Comment

I have been holding on to OSK Osisko for the last year and have watched as it reached its high of 7.00 to these lows. They released an updated resource estimate on their property in the Malartic. But it dropped to a new 52 week low. Was the market expecting higher resources or is it […]


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OSK has been shredding wealth

OSK has been shredding wealth

I have been holding on to OSK Osisko for the last year and have watched as it reached its high of 7.00 to these lows. They released an updated resource estimate on their property in the Malartic. But it dropped to a new 52 week low. Was the market expecting higher resources or is it just bad timing overall.

Thanks
Glen

Hi Glen,

Osisko Exploration Ltd., OSK TSX, has been a stock that I followed because a fellow traveler on the GO Train System here in the Toronto area put me onto it years ago.

Dan is a guy on the make who spotted me and started talking about the markets as many investors do and which I appreciate because you never know where the next hot stock is going to come from. Dan had a nice position in the stock and when it ran in 2006 I was very happy for him and his family.

But 2008 is not 2006 and OSK has been shredding wealth since the early part of this year. As I have said many times in 2008 the junior mining sector is taking a pounding not so much because of anything other then the prevailing economic environment.

Gold is selling off on a rebound in the U.S. dollar and good stocks are being sold to cover bad trades. In addition we have a credit crunch in full bloom and that means that money is tight and capital dependent companies are forced to eat bugs off the forest floor to keep the ball rolling. It happens like this once every ten years. It’s painful but healthy.

Now to your question, yes there was an expectation that the resource estimates would go to double digits which it didn’t do. Although at over 8 million ounces of gold at its Malartic project in Quebec it’s still an excellent project and has been touted as a takeover target in the past.

The chart tells a good bit of the story. OSK was range bound between $5 and $6 for most of 2007 and into early 2008. It traded in the range 4 times over that period which isn’t too shabby for a stock going sideways!

When it broke below $5 in April it was time to hit the silk. The break below $3 is very disconcerting but with the RSI signaling an oversold situation it could provide an opportunity at these levels if the MACD turns.

Happy Capitalism!

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