Breakwater Follows Zinc Higher

May 7th, 2009 – Comment

Lou: What is your opinion of Breakwater Resources (BWR) as a longer term investment. Thanx, Robbie Hi Robbie, Breakwater Resources ( BWR TSX) has taken a nice jump on the rising price of zinc over the last number of weeks.  The company operates three producing mines in British Columbia, Honduras, and Chile. You can see from […]


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Lou:

What is your opinion of Breakwater Resources (BWR) as a longer term investment.

Thanx,

Robbie

Hi Robbie,

Breakwater Resources ( BWR TSX) has taken a nice jump on the rising price of zinc over the last number of weeks.  The company operates three producing mines in British Columbia, Honduras, and Chile.bwr

You can see from the chart that the stock is up close to 100% this week alone. The MACD generated a buy signal April 13. The RSI is indicating an overbought situation which can be a sign of strength if investors continue to buy the story.

There is a bit of resistance at $0.25 and if BWR can get through that level it can run without much in its way to $1.00.

The company has a mine in Quebec on maintenance which if zinc prices continue to strengthen they could put back into production if the economics make sense. The improvement in base metal prices has been driven by speculation that the Chinese economy is starting to recover. Amen to that I say.

Lets not lose sight of the fact that Breakwater Resources is a penny stock that recently closed an offering of 200 million units priced at $0.10. The units consist of a share plus 1/2 warrant good till 2014. The warrants have a strike price of $0.12. That just adds to a big sloppy float.

I don’t see Breakwater as a long term investment.  BWR is a momentum play that you don’t want to get married to. If you are going to buy this company you have to trade it for profit when they are available. BWR lives and dies by the price of base metals so watch those for signs of strength or weakness.

Happy Capitalism!

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