Eldorado Gold: This Gold Bearish Spell Is An Opportunity

Summary

• Revenues were $278.5 million, up from $191.87 million the same quarter a year earlier and slightly down sequentially.
• The company announced fourth quarter gold production of 138,220 Au Oz for Q4.
• I am using this bearish spell as an excellent opportunity to accumulate.

Source: Eldorado Presentation

Investment Thesis

Vancouver-based Eldorado Gold (NYSE:EGO) released its results for the fourth quarter and full-year 2020 on February 25, 2020.

The gold producer's operational results were impressive again, but it has been in free-fall since then. Eldorado Gold reached its 2020 guidance as it maneuvered through the coronavirus pandemic negative effects.

The issue is that gold is down sharply just in the last few weeks, and the gold mining sector is following the trend no matter what. In fact, the gold price is correcting from its August high and describes a perfect 10-year Cup & Handle pattern that I have explained many times on Seeking Alpha. We are now well into the bearish handle of this bullish pattern.

In my preceding article about the fourth quarter preliminary gold production, I wrote:

We are entering 2021, and it is time again to make some cautious predictions of stock's performance that have been a severe disappointment to many long term investors in 2020. 2020 offered everything we can imagine to set a stellar year, yet we are back to the $10s again.

Nothing has really changed, and EGO is back again in the $10s even after announcing the news of a groundbreaking agreement with Greece about the Skouries mine. What could do the trick?

The investment thesis is a little complicated now. Eldorado Gold is unquestionably a long-term investment candidate. The future growth is evident, and Greece's situation is now realistically solved with an agreement that should be ratified by the Greek government very soon. It is not the end of the process but an exciting beginning.

However, it is prudent to trade short-term regularly your long-term position. The gold sector is highly volatile and could turn ugly on short notice.

The recent drop in gold price reaching another

Analyst’s Disclosure:I am/we are long EGO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am accumulating now