After its huge copper find in Idaho last fall, Hercules Silver (BADEF:OTCMKTS;BIG:TSXV) is thought to be as much a copper stock as a silver stock, hence the color of the charts in this article. On the back of the news about the discovery of copper, there was a huge runup, rising almost 8-fold in October and November.
However, it's one thing to make a big discovery but quite another to build the infrastructure and mine to get the material out and to market — that takes a lot of time and a lot of money.
Hence, after the excitement about the discovery drove the price up, the inevitable reaction and hangover set in and this included a nasty drop, a big high-volume gap down at the end of last year visible on the latest 7-month chart below that would have left a good many investors, especially latecomers, stunned and shell-shocked, but just as the runup on the discovery usually gets overdone, the hangover reaction can get overdone on the downside and this is believed to be the case with Hercules, especially as a major metals bull market has just begun in recent weeks with a standout being copper.
Thus, it is interesting to observe that as Hercules has tracked sideways since the start of the year following the plunge, its Accumulation line has risen to make new highs, which is rather remarkable and has definite bullish implications, and momentum (MACD) has recovered, trending steadily higher to the point that it is about to turn positive, a common precondition for an uptrend to develop. Hercules appears to be gradually starting to ascend away from the Double Bottom that formed in January and February and once it breaks above the upper boundary of the trading range that has characterized trading so far this year, it is likely to accelerate to the upside, especially if, as expected, copper itself (and silver) also accelerates to the upside.
Just how much Hercules could accelerate to the upside becomes apparent when we look at its 5-year log chart. On this chart, we see that all of the action from early 2021 has been contained within the giant parabolic slingshot uptrend shown. While this parabolic uptrend is becoming steeper, we should keep in mind that this is a long-term chart and also that, with a severe copper supply crunch due to hit as early next year, copper could appreciate greatly, especially as its bull market is likely to be intensified by the background of a gathering general metals bull market with gold and silver set to soar.
So even though the blue up arrow shown on this chart may seem rather far-fetched, it is quite within the realms of possibility, and an additional driver for this could well be the ambitious drilling program that Hercules has scheduled for this Summer.
It is therefore considered probable that the nearby support shown on the 7-month chart in the CA$0.65 – CA$0.70 area will not be breached, and Hercules is rated a Strong Buy here with the dip of the past few weeks, bringing it back to a better entry point. There are 215.3 million shares in issue, and of these, insiders own 6%, and Barrick Gold owns 15%.
Hercules Silver Corp.'s website.
Hercules Silver (BADEF:OTCMKTS;BIG:TSXV) closed at CA$0.83, $0.617 on April 9, 2024.
Originally posted at clivemaund.com at 9:30 pm EDT on April 9, 2024.
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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. 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 cannot be only be construed as a recommendation or solicitation to buy and sell securities.
