Golden Minerals is a Delaware corporation based in Golden, Colorado, primarily engaged in the advancement of its pipeline of exploration projects in Mexico and South America. The Company has a portfolio of approximately 30 exploration projects, including the El Quevar project in the Salta Province of northwestern Argentina and advanced stage drilling projects in Mexico and Peru. Back in August of 2010, the company announced an increase in silver reserves at the El Quevar project to 60 million ounces. Silver currently is being priced at more than $23/oz.
Silver is surging
Silver is in a serious bull market. See chart below:
Although silver has been priced lower in recently days, most believe the price will eventually move higher. The Chinese in particular are ultra concerned with inflation and are also hoarding precious metals and rare earth elements to help fuel their domestic growth. As a result, China is expected to reduce there silver exports by 40%. By a major player like China reducing the rest of the world's supply, the price of silver should inherently rise.
Low Float
After a recent private placement, Golden Minerals still only has about 15 million shares outstanding. Over 87% of the shares are owned by institutional holders or insiders. That is the one of the highest among publicly owned precious metal companies. That means only about 2 million shares are left to the retailers for trading purposes. In other words, it won't require much to move the stock higher.
Technicals
See below for AUMN chart:
As you can see, the stock first began its rise in September and has move up about 300% in the last two months. AUMN finally took a short breather during the 2nd week of October when the company announced a secondary offering. During the offering the Bollinger Bands tightened, which generally is a technical precursor for a significant move, at around $22/share. On Friday, Golden Minerals announced that the offering was over and the shares explode to $25 on solid volume signaling another technical breakout.
Huge price target increase
After the initial explosion of AUMN from $8 to $15 due to the surge in silver prices, the stock hit overdrive when a price target of $104 was given by the brokerage firm Dahlman Rose. With silver priced the way it is, the firm believes that AUMN deserves a billion dollar plus market cap to make it comparable to its peers. After the secondary offering, the target was later revised to $85. Even with AUMN currently at $25, the price target allows for plenty of upside. See link for the report. http://www.scribd.com/doc/38536240/DRCO-AUMN-CoNote-2010-10-01
Insiders are still buying
Some people would be hesitant to buy a stock that's already moved 200-300% so quickly. Well, the insiders of AUMN aren't one of them. During the company's secondary offering priced at $18.50 practically every significant insider in the company participated. The CEO, CFO, VP, Chief Geologist and Directors all took advantage of the opportunity to add to their share count. Also, AUMN's largest institutional holder added during the placement as well. If all of those guys feel confident about adding at these levels, I see no reason why a retail investor wouldn't be comfortable doing the same.
Conclusion
This stock maybe has more indicators for upward movement than I've ever seen. You've got a low float company with assets of the surging commodity silver, great technicals, a big price target, and insider buying. I haven't even mentioned the fact that low float big board stocks have been red hot of late (LIVE, RITT, etc.). Golden Minerals could be another one that gets pushed up by traders as well. The only thing that I see that could derail the upward movement of AUMN is if the price of silver does a temporary nosedive. I believe $40-$45 will come quickly. Golden Minerals Company (AUMN) is the perfect stock.
