On Monday RGL.TO – Royal Gold Inc. closed at $63.21 On Friday it closed at $47.25. That’s a 25% drop in one week.
That’s Epic.
What happened? Royal Gold, a gold royalty stream company, announced the second consecutive quarter or record volume, but there were some tax issues with the liquidation of some assets, and that killed the stock.
It’s not fun when one of your biggest holdings gets hammered. This week was not fun.
So what’s next?
As the chart shows, the RSI is now down to 20.64, which is a level that has always lead to a bounce. The $45 level is where the stock bottomed at the end of 2014, so it’s likely we are at a strong base.
There is nothing particularly wrong with the company. They are generating an operating profit, and even with gold at low prices they will continue to generate an operating profit. They have a dividend yield of 1.84%. So, since the time to sell was a week ago and I obviously missed that, I’m holding, and I’m gambling. I bought the December $56 calls, on the assumption that over the next week or two we are likely to see a significant bounce, and hopefully that allows me to recover some of my losses. I’ll hold the options for two weeks, and if I’m not in a profit position on those I’ll sell and take my lumps.
This epic crash is not occurring in every gold stock. My other large holding is FNV.TO – Franco-Nevada Corp.. Here’s the same three year chart:
Unlike Royal Gold, Franco Nevada remains in a three year uptrend.
As I reported two weeks ago, I wrote calls against it that were called in October and I lost my shares, but I had no intention of re-buying them at inflated prices. Instead, I put in an order at $62 (this when the stock was over $70), and sure enough, I got filled on Friday at $62. So, I’m back in the game, at a reasonable price.
If we have a bounce this week I’ll do a covered write against both stocks and hope to live to fight another day.
For the record, I don’t just own gold stocks. I have other securities that are performing much better, so time permitting I’ll have some comments on those next week.
For now, I lick my wounds and move on.
Thanks for reading. See you next week.
Epic Collapse for Royal Gold
by JDH on November 7, 2015
On Monday RGL.TO – Royal Gold Inc. closed at $63.21 On Friday it closed at $47.25. That’s a 25% drop in one week.
That’s Epic.
What happened? Royal Gold, a gold royalty stream company, announced the second consecutive quarter or record volume, but there were some tax issues with the liquidation of some assets, and that killed the stock.
It’s not fun when one of your biggest holdings gets hammered. This week was not fun.
So what’s next?
As the chart shows, the RSI is now down to 20.64, which is a level that has always lead to a bounce. The $45 level is where the stock bottomed at the end of 2014, so it’s likely we are at a strong base.
There is nothing particularly wrong with the company. They are generating an operating profit, and even with gold at low prices they will continue to generate an operating profit. They have a dividend yield of 1.84%. So, since the time to sell was a week ago and I obviously missed that, I’m holding, and I’m gambling. I bought the December $56 calls, on the assumption that over the next week or two we are likely to see a significant bounce, and hopefully that allows me to recover some of my losses. I’ll hold the options for two weeks, and if I’m not in a profit position on those I’ll sell and take my lumps.
This epic crash is not occurring in every gold stock. My other large holding is FNV.TO – Franco-Nevada Corp.. Here’s the same three year chart:
Unlike Royal Gold, Franco Nevada remains in a three year uptrend.
As I reported two weeks ago, I wrote calls against it that were called in October and I lost my shares, but I had no intention of re-buying them at inflated prices. Instead, I put in an order at $62 (this when the stock was over $70), and sure enough, I got filled on Friday at $62. So, I’m back in the game, at a reasonable price.
If we have a bounce this week I’ll do a covered write against both stocks and hope to live to fight another day.
For the record, I don’t just own gold stocks. I have other securities that are performing much better, so time permitting I’ll have some comments on those next week.
For now, I lick my wounds and move on.
Thanks for reading. See you next week.