originally published Tuesday, April 10, 2018
Utopia for a speculator is to let other people do years of work preparing something to be
profitable, and then to join in right at the moment when the fruits of this long labor are about
to be realized, and share in the spoils, and happily, because you can freely buy and sell shares
in a stock like this just when you like that is exactly what we can do with it, and an added
bonus is that, thanks to the sector bearmarket from 2011, it is now crazy cheap. The final
cherry on the cake would be if we learned that Jim Sinclair, whose company this is, had
liquidated his personal fortune to save the company from going bankrupt – but perhaps this is
asking a little too much.
On the long-term 16-year chart we can see that Tanzanian Royalty has been one of the biggest
victims of the sector bearmarket from 2011, having dropped from a peak at $7.80 to bottom at
just 24 cents, meaning that it lost 97% of its value. It is still only at $0.39 which means it is
very, very cheap. On this chart we can also just see that a large Double Bottom has formed
between 2015 and the present. We will now proceed to look at this in more detail on a 4-year
On the 4-year chart we can see that a fine large Double Bottom has formed, and that it is now
starting to rise off the 2nd completed low of the pattern. The sharp rise off the 2nd low at the
start of this year has the attributes of an impulse wave, or a move in the direction of the
primary trend, which should now be up, and if this is the case, the subsequent reaction/consolidation up to the present should be followed soon by another upleg. Volume indicators
are not very inspiring but these sometimes move with the price instead of in a predictive
manner ahead of it.
On the 1-year chart we can see recent action in much more detail. This chart reveals that the 2nd low of the large Double Bottom took the form of a Cup, with a characteristic high volume
spike out of the right side of it, before it bedded down into a Handle consolidation pattern that
should soon be followed by another upleg. The reaction back of recent weeks has allowed time
for the earlier overbought condition to unwind, and for the 50-day moving average to catch up
with the price, and its crossing through the 200-day is a bullish development, so that the
current tight bunching of price and moving averages has created a potent technical situation
that could lead to a sharp rally, and it is suspected that the tight little pattern that has formed
over the past 2 – 3 weeks is a small bull Flag. If it is then it will rally imminently.
Conclusion: Tanzanian Royalty looks very cheap here and is rated a strong buy. Whilst
it could react back to the support again in the $0.32 area, this is considered unlikely. Much
more likely is that it will break out of the small Flag and above the nearby resistance very
Finally, you should not be ashamed if you do not know where Tanzania is. After all, when
Jimmy Carter was advised that war had broken out in Chad, his reply was “Chad, where the
hell’s that?”, and that was when he was President. Really it doesn’t matter where it is as long
as the stock goes up.
Tanzanian Royalty Exploration Corporation, TRX, TNX.TSX, closed at $0.39, C$0.485
on 9th April 18.
Posted at 8.20 am EDT on 10th April 18.