Image: Efemçukuru Gold Mine Source: EJAtlas
Investment Thesis
The Vancouver-based Eldorado Gold (NYSE:EGO) released its preliminary production results for the fourth quarter of 2019 on January 13, 2020. As expected, production was above 115k Oz, and I was pleased to see such a record production number even if it was slightly below expectations due to Kisladag and Lamaque as well.
Investing in Eldorado Gold has not been for the faint-hearted investors, but for the ones who were thick enough to handle the pressure last year, this investment was a gift from heaven.
The graph below is showing the sharp uptick that the stock experienced between May and September 2019. We can also see that despite some natural retracement in the last five months, the stock has seriously outperformed significantly the VanEck Gold Miners ETF (GDX), which is considered a benchmark for gold miners.
The only question remaining is if there is more room for more profit.
With this news release, I will attempt to give you some light on this sensitive subject.
The investment thesis here is straightforward. Eldorado Gold should be considered again as the right candidate for a long-term investment. The production for the fourth quarter of 2019 has marked a transition, in my opinion, and it is time to free EGO for the dog house. We may leave George Burns, the CEO, a little longer until he demonstrates that he is the leader that the company deserves.
The recent numbers make me confident again that gold production is under control. Hence, with the gold price reaching some new highs recently, the future of this gold miner is bright, especially in the low 7's range or lower, which seems to act as reliable support now.
However, it is also crucial to trade EGO short term using about 30%-40% of your
