Take physic, pomp

Dynasty Metals (DMM.to): Holding pattern

Dynasty Metals (DMM.to) is the Ecuador gold play currently ramping up operations at its Zaruma mine. Commissioning is well underway and as far as newsflow and word goes, the process is pretty much on track. On a personal level, I’ve owned since the low point late last year, I like the stock very much and I’m happy and very relaxed about holding what I have.

What follows was prompted by an e-mail exchange with a new subscriber (hi HF) who also owns DMM.to, and as is often the case the act of composing my thoughts helped me crystallize them. This is one of the many reasons why I like the e-mail feedback from you guys. So as DMM.to is one of the stocks I follow pretty closely, let’s take a step back, have a look at a couple of charts and use them as a vehicle for comment on how the stock has performed recently. Firstly, here’s the 12 month chart….

…and after the late ’08 swoon, the stock quickly rebounded, touching the $5.50 or so level. But since then it has fallen back to its current $3.50 or so range (right now trading $3.60). The chart looks healthy enough, and if we add the RSI, MACD and Bollyband indicators, after the recent drop things look like they’ve found a more neutral trading market.

So if we zoom in and check the most recent action in DMM.to via this 10 day chart….

…..we see that, apart from one single trade of 100k, there’s really nothing much doing in the stock. So what does all this suggest? It seems to me that all the buyers have bought, all the sellers have sold, those that see fundamental value in DMM.to and know that the political risk factor is overstated are happy to hold through (i.e. myself) and those that have been scared away from Ecuador and won’t touch the country with a bargepole are looking in other spaces for junior gold exposure.

What will make things change? That one seems pretty simple, really. Those with a better understanding of the risks in Ecuador will just have to wait until the company starts posting strong revenue numbers and the naysayers are proven wrong. This will take a while…..we’re talking months here, not weeks. but gradually, the ignorant about Ecuador will get a lesson in hard numbers. They’ll be shown that miners can do business (good business at that) in the country and that’s when the stock will move up. Until then we’re likely to stay in the current holding pattern, which is ok, too. Sometimes investment do go boring which perhaps doesn’t appeal to the MTV attention spans but it’s fine by me. What about you?

DYODD, dude.

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