Last month I made Aftermath Silver my top stock pick for April. Now this month I am doing the same thing, because of the position the stock is in right now.
First of all we saw big moves in gold and silver in the first half of last month in which gold made a new high for the year and many mining stocks surged to new highs too, including industry giants such as Newmont Mining, which I do own. Precious metals and mining stocks are now outperforming the S&P 500 and as a general rule of thumb to beat the market you want to be in the stocks of sectors that are beating the market. However, gold and silver are pausing in the final days of April to setup a nice consolidation moment that can bring a good entry point in the best stocks. in May
Here is the chart of Aftermath Silver, which trades as AAG on the Canadian exchanges and AAGFF on the US OTC market.
As you can see the stock had a nice move in April from its March low and has rallied up to its 200-day moving average. My expectation in April was that we would see it get back up towards where it got to in January in the coming months. The move up to the moving average though could set it up to pause and consolidate to digest the big gains of the past eight weeks for a few weeks here before it breaks out and runs again. It would be a trading setup similar to August of last year.
So watch this stock this month and see if it pauses here and look to buy and trade and get on board for the next move. The company is a silver exploration company that 12 months ago was essentially just starting up as a blank check blue sky operation. It went through various investor financings, including one with mining billionaire Eric Sprott, in order to be fully funded. It has closed on two property transactions in Chile with plans to begin exploration activities on them this year once travel restrictions are lifted. At the moment the company has a market cap of roughly $13 million US. In metals bull markets historically companies like this reach a base market cap of $25 million. So from a valuation perspective the stock is now cheap and the price action suggests that the intermediate-term trend is up.
At the February Toronto PDAC the CEO of the company gave this interview with Andrew Scott of Proactive:
One thing that can make it pause for a bit is the fact that the coronavirus is causing it – and other mining companies – to have to pause operations for the moment. It gave a corporate update ten days ago saying that it is on pause because of the virus for the moment. That can create a great entry point in the stock for those that keep their eye on it this month.
In my view gold and silver are the place to be in these markets. I talked about why I think they will keep going up in this video I did at the end of March:
-Mike
Disclosure: Mike Swanson owns a position in Aftermath Silver. Because it is a small cap stock with less than $100 million in market cap he is placing himself on a voluntary 30-day trading restriction period from the date of this post in which he will not buy or sell shares of it. After that date passes he may or may not trade it without warning.
