Technical analyst Clive Maund examines the charts for Hercules Silver to explain why he thinks it is a strong buy.
After its huge copper discovery in Idaho last fall, Hercules Silver (BADEF:OTCMKTS;BIG:TSXV) These are believed to be as much copper stocks as silver stocks, hence the color of the charts in this article. Behind news about the copper discovery, there was a huge increase, almost 8-fold in October and November.
However, it's one thing to make a big discovery, but another to build the infrastructure and mining necessary to get the materials to market – it takes a lot of time and a lot of money.
Therefore, after the excitement over the discovery drove the price up, the inevitable reaction and hangover set in, including a sharp decline, a large volume gap at the end of last year, visible on the latest 7 month chart below. would have left a good number of investors, especially latecomers, stunned and shocked, but just as the preparation for discovery is usually exaggerated, the hangover reaction can be exaggerated on the downside and is believed to be the case of Hercules, in particular. as a major bull market for metals has just begun in recent weeks, with copper standing out.
So, it is interesting to observe that while Hercules has been trending sideways since the beginning of the year after the plunge, its accumulation line has increased to reach new highs, which is rather remarkable and has definite bullish implications, and momentum (MACD) has re-established. , trending steadily upward to the point that it is about to turn positive, a common prerequisite for the development of an uptrend. Hercules appears to be gradually starting to move away from the double bottom formed in January and February and once it exceeds the upper limit of the trading range that has characterized trading so far this year, it is likely to accelerate to upside, especially if, as expected, copper itself (and silver) also accelerates higher.
The extent to which Hercules could accelerate higher becomes evident when we look at its 5-year logarithmic chart. On this chart we see that all of the action in early 2021 has been contained within the illustrated giant parabolic slingshot uptrend. Even as this parabolic uptrend deepens, we need to keep in mind that this is a long term chart and also that with a severe copper supply crunch expected to occur as soon as the early next year, copper could appreciate significantly, especially as its bull market is on the rise. It is likely to intensify amid a general bull market in metals, with gold and silver soaring.
So while the blue upward arrow shown on this chart may seem rather far-fetched, it is still well within the realm of possibility, and an additional factor may well be the ambitious drilling program that Hercules has planned for this summer.
It is therefore considered likely that the close support shown on the 7-month chart in the area of CA$0.65 to CA$0.70 will not be breached, and Hercules is considered a strong buy here with the decline in prices. last few weeks, bringing it back to a better entry point. There are 215.3 million shares outstanding, of which 6% are held by insiders and 15% by Barrick Gold.
Hercules Silver Corp. website.
Hercules Silver (BADEF:OTCMKTS;BIG:TSXV) closed at CA$0.83, $0.617 on April 9, 2024.
Originally published on clivemaund.com at 9:30 p.m. EDT on April 9, 2024.
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Clivemaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him at the time of writing. Mr. Maund's opinions are his own and do not constitute a recommendation or offer to buy or sell any security. Because trading and investing in any financial market may involve significant risk of loss, Mr. Maund recommends that you consult a qualified investment advisor, licensed by the appropriate regulatory bodies in your jurisdiction, and make your own due diligence and your own research when making any kind of transactions. of a transaction with financial consequences. Although qualified and experienced stock analyst, Clive Maund is not a registered securities advisor. Therefore, Mr. Maund's opinions on the market and stocks should not be construed solely as a recommendation or solicitation to buy and sell securities.