Review: Royal Gold (RGLD) Speed Resistance Lines

On October 12, 2012 (found here), when Royal Gold (RGLD) was within 11 trading days of the all-time high at $89.27, we said the following:

“The SRL for Royal Gold at $44.62 doesn’t seem outlandish given what has already occurred in the previous declines from prior peaks.  The X marks the first decline after a “minor” parabolic move that was later exceeded on a larger scale to point A1, B1 and C1.  Additionally, the  X reflects the minimum retracement from the top and has provided consistent support for the price for RGLD.

“We’d consider buying RGLD if it declines to either of the support levels of X3 or C2.  The movement of RGLD has been consistent with the price of gold (GLD) which is in stark contrast with gold stocks as represented by the Philadelphia Gold and Silver Stock Index (^XAU)....”

The review of Royal Gold’s Speed Resistance Lines (SRL) shows, in the chart below, that the conservative downside target has been met.

RGLD has fulfilled almost all of our expectations for downside risk since October 2012.  Although we’d much rather see this stock reach the extreme downside target of $33.28, we feel that purchases at the current level and below would be consistent with asset accumulation and wealth building, in contrast to those who were considering the stock at or near the October 2012 levels.  Anyone interested in RGLD must accepted that there may be additional downside below $33.28.