Do we love gold?

Stock Watch

by Regina Meani

Market analyst Regina Meani discusses Bardoc Gold Limited (ASX:BDC).

Our last updates on the gold price were on 15 and 29 November last year. On 15 November the price was US$1867.90 and we described it as at the crossroads. The crossroads being the downward trend line from early 2021 combined with the barrier zone between US$1800 and $1900. On 29 November we alerted our readers to the failure from the barrier and described the subsequent trading sell signals. We now find that on Friday (11 February 2022) that the price has made an unsustained break through the 2021 downward trend line. The break is as yet unsustained as the price failed to close above the trend line with a close for the day at $1840. The action remains tenuous until there is a clear break of the line. Some may use the 3% verification rule and this would equate to around $1900 which is around the upper limit of the main barrier and may be a preliminary signal. However, we would caution that the price would still face higher barriers at $1920 and $1960 but these may only act as areas of resistance and produce a pause on the way higher for the metal, once the new upward leg is established.

As we suggested in November, traders and investors should continue to be vigilant while the gold price remains in a vulnerable position but be alert to the prospect that it is again trying to break its barriers to the upside, maybe it will be a valentine’s breakaway?

With this in mind we have chosen a diversified gold stock in Bardoc Gold Limited (ASX: BDC 47c) which has both gold and Manganese projects in Western Australia. The company boasts that it is Australia’s new long-life, high margin gold project. The 100%-owned Bardoc Gold Project is located just north of Kalgoorlie in the Eastern Goldfields of Western Australia. The Project has five main gold deposits which include Aphrodite, Excelsior, Zoroastrian, Mulwarrie and Bulletin South as well as a many other smaller deposits. 

The South Woodie Woodie Manganese Project comprises two retention licences and five granted exploration licences. The company’s Tally Ho target was Bardoc’ first significant discovery within the South Woodie Woodie Project area and comprises a zone of near-surface manganese mineralisation.

To counter the uncertainty with the gold price, the manganese price has been rising steadily through 2021 gaining over 26% from November 2020.

The share price for Bardoc Gold trended down from $15.03 in mid-2011 to reach a pivotal turning point at 10.8c in June 2016. The subsequent recovery reached $1.03 just over a year later and encountered resistance drawn form 2013 and measured extremely overbought readings. In reaction the price paused and then broke down to decline and find a double turning point at 24c in March/April 2019. From here the price rebounded to halt again in momentum overburn at 78c in September 2019. This action combined with the peaks in August 2014 and July 2017 have formed the top of what has the appearance of a large developing base. The downturn in 2019 has seen the price oscillate underneath the proposed top line of the base to form part of its final stages finding support above 24c.

To complete the base the price initially needs to break through 58c with confirmation through 63c for a retest of 78c and then 88c and $1.00 but with the potential to move significantly higher.

The risk to this scenario would be a failure to complete the base. At current levels a drop below 41c would signal further action within the base and may delay the upward break. As always traders and investors should use their own risk strategy to place stop loss positions.


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