Rubicon Minerals Corp. a candidate for a tax loss sale

Nov 18th, 2015 – Comment

Only for those with a high tolerance for risk.


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Hello Lou,

I have a loss on my investment in Rubicon Minerals. Please look at the charts, and let me know what you think. Rubicon is very cheap now. Should I buy more?

Thanks,
Soheila

 

 

 

Hey Soheila,

Thanks for the assignment. This will be the fourth time since 2013 that I examine the charts for Rubicon Minerals Corp. (RMX TSX). The last time was on October 22, 2014 on a request from Dean. The shares were trading for $1.31 and he wanted to know if the stock was offering an attractive entry point.

At the time management was holding on to the projection that they could get their Phoenix Gold Project into production by mid 2015 with the caveat that additional funding would be needed to get the job done. The all in cost per ounce on the project was estimated to be $870.00 which had implications given the decline in gold prices.

The stock was operating under a downtrend and holding tenuously to support at $1.30. In addition the shares had broken below the 50 and 200-day moving averages and the momentum indicators were not generating buy signals. The conclusion of the analysis was that the sellers were still in control of the market and Dean would be best served enhancing his pattern recognition skills to add to his personal investor tool kit.

Unfortunately that was the right call. RMX continued to sell off to a low of $0.95 by October 31, 2014.

Another inspection of the charts will help inform my thoughts on this investment

 

RMX

The three-year chart pulls focus on the sell off that has made 2015 a bad year for those holding the stock. The breach of support along the 50 and 200-day moving averages in July were the first warning signs that there was trouble brewing at RMX. In August another call to action surfaced as a death cross emerged. Through September the shares were meeting resistance along the moving averages and just holding onto support at $1.00.

The first gap down arose in October when the company had to temporarily suspend mill operations at the Phoenix project. The second collapse in November was a result of the temporary halt of underground activities at the site.  Those operational issues brought about a selling frenzy taking the shares to a 52-week low of $0.17.

 

RMX2

The six-month chart isn’t providing much in the way of encouraging averaging down at this time. There is speculation in the market of a possible takeover bid given the low price of the stock but buying a stock on rumours is like trying to catch lightning in a bottle.

At this time the shares are oversold and the formation of a double bottom might bring buyers back to RMX but I don’t anticipate a return to $1.00 in the near term.

You might want to consider a tax loss sale now and if you are bound and determined to add to your holdings do so in the new year. Make sure to consult with your accountant on the tax consequences of the sale.

 

Next time I will examine the charts of Bonavista Energy Corp. (BNP TSX) for Jane.

 

Make it a profitable day and happy capitalism!

 

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