Ordinarily we would be buying the 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 stockmarket 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. 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 stockmarket crash phase is over.
However in the case of Dolly Varden we 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 entitled 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 website
Dolly Varden Silver DV.V, DOLLF on OTC, closed at C$0.65, $0.476 on 2nd October 23.
Posted at 8.00 am EDT on 3rd October 23.