Ordinarily, we would be buying the precious metals (PM) sector across the board here because sentiment towards the sector stinks with readings at the sort of levels that are associated with an important bottom. But if the broad stock market crashes soon, which is considered likely, as you know, then readings could drop to even lower levels due to widespread collateral damage from a brutal pan selloff. Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX)
This is why we are holding off on making further purchases of PM stocks, with an awareness that it could flip to the upside at any time and is expected to do so before the initial stock market crash phase is over.
However, in the case ofwe are prepared to make an exception and buy it right away for three reasons.
One is that, as pointed out by Mr. Bob Moriarty of 321gold in his article just out titled "Dolly Varden is Still Silver," 93% of the company's stock is owned by insiders and large funds, and the insiders at least are unlikely to be moved to sell, another is that, as he also points out, results are pending from a 100-hole drill program, which could be interesting, to say the least and lastly, as you can see on our 1-year chart below, Dolly is right down on strong support where it appears to have been building out a base pattern since June with the volume pattern and Accumulation line positive.
Could Dolly break to lower levels during a market crash? Well, we can't rule that out, but it is made a lot less likely by the factors set out above, and if positive drilling results are forthcoming, it could then take off like a rocket, and we should keep in mind that if it is forced lower temporarily by a market crash, then it is likely to come bouncing back hard and fast, like a beach ball that is pushed under water.
Dolly Varden Silver's website.
Dolly Varden Silver closed at CA$0.65, $0.476 on October 2, 2023.
Originally posted at Clivemaund.com at 8.00 am EDT on October 3, 2023
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.