Hi Lou:

Will you please provide your analysis and opinion on Lake Shore Gold (LSG-T).

Thank You.

Fred

 

Hi Fred,

Thanks for the assignment. Lake Shore Gold Corp. (LSG TSX)  is working to bring their Timmins Mine into commercial production in the fourth quarter of 2010. The company is also planning to spend $31M on exploration this year to get a better idea of what mother nature has in store for the company at its various properties. The stock has pulled back from the recent highs and the question is can LSG pull out of the dive and get back onto an uptrend?

The three year chart shows that the  trend that supported the rise from the late 2008 lows has been broken. In addition the 50 day moving average looks about to cross below the 200 day moving average, and the MACD looks to be turning below the signal line. Not robust signals to say the least.

The six month chart is no oil painting either. There is resistance along both the 50 and 200 day moving average and the stock has tested  support at $2.80. At this point you could consider trying  to catch a bounce off $2.80 but watch for resistance at $3.20 along the 200 day moving average.

At this point all the good news looks like it was baked into the souffle and since January the air has leaked out of the fluffy dish. With $31m  in the budget for exploration investors can expect a stream of press releases reporting drill results that could help LSG break above the trend line of the current retreat.

The last thing to keep in mind is that according to ” Thackray’s 2010 Investor’s Guide” the period of seasonal strength  for gold runs from the middle of July to the begining of October so we might be best served to be patient and set up a nice get.

Happy Capitalism!