WINDERMERE, Fla. (Stockpickr) -- Europe is once again teetering on the brink of crisis as the eurozone approaches a key G-20 summit slated for this weekend. The latest drama hitting the wires today was doubt as to whether Greece's parliament will approve a referendum on the country's next bailout.
Some market observers think that Greece is bluffing and that Prime Minster Papandreou is using the threat of a referendum as a way to force the European Union into offering him a better deal on Greece's debt issues. A referendum is a nightmare scenario because it will prolong the debt crisis and could cause a cascading negative effect in the European bond market.
The 10-year Italian debt yields crossed 6% on Monday, which is a level that many traders call the danger zone; between 6% and 7% is where it gets very hard for Italy to service its debt.
The unintended consequences of a failed European debt crisis solution are huge. Senator Richard Shelby, who is the ranking member of the Senate Banking Committee, warned today that the euro debt crisis could push the U.S. into a big recession. If Greece were to default, it could be forced to leave the eurozone, which in turn could spark a currency crisis for the euro.
No matter what way you cut it, the renewed fears over the European debt crisis should set up gold and silver for another monster run. If we do end up getting a big bailout in Europe (the likely scenario), then gold and silver should win as central banks will embark on more money printing. If we don't get a bailout and we end up with a Greece or Italian default, then gold and silver should go up in the midst of a currency crisis. If we just simply end up in a big recession, then gold and silver should win again as people pile into the yellow metal as safe haven trade.
The bottom line: Gold and silver will be the winning trades and some of the beaten-down and underperforming (versus the precious metal) mining stocks should win big. I like the idea of playing the mining stocks ahead of what could be new all-time highs coming for gold and silver. Many of these companies are going to feed at the trough of massive profits if those precious metals take off again.
With that in mind, let's take a look at some potential winners and the key technical levels that traders should be watching that could trigger large spikes in the coming days or weeks. Here are
is a gold mining company engaged in gold production and in the acquisition, exploration, development and operation of gold mineral properties in Brazil. This stock is down by around 15% so far in 2011, but if gold takes off again, we should see JAG rack up some solid gains.
52-Week Range: $4.03-$7.90
Today's Volume: 2.18 million
Three-Month Average Volume: 2.13 million
Jaguar Mining has a market cap of $506.24 million and an enterprise value of $609.80 million. The stock trades at a forward price-to-earnings of 12.24. Its estimated growth rate for this year is 268.40%, and for next year it's pegged at 53.10%. The current short interest as a percentage of the float for Jaguar is a rather large 14.3%.
From a technical standpoint, traders should look to play the breakout for Jaguar if the stock can manage to trade above $6.77 to $6.78 on heavy volume. Look for volume that's tracking in close to or above its three-month average volume of 2.13 million. It's worth noting that volume during the past couple of weeks on the up days has been tracking in very strong.
Traders should look to play the breakout and then add to any long positions if the stock takes out its next significant resistance level at $8.30 a share. Make sure to keep a tight mental stop just below the breakout levels if we get it, in case the stock fails to trend higher.
Great Panther Silver
Great Panther Silver
is a silver mining and exploration company whose activities are focused on the mining of precious and base metals from its wholly owned properties in Mexico. This stock is down around 6% so far in 2011, but if gold takes off in the near-term, then I expect silver to follow. That in turn should make shares of Great Panther Silver a big beneficiary of any upward spike in silver.
52-Week Range: $1.19-$5.04
Today's Volume: 692.668
Three-Month Average Volume: 1.73 million
Great Panther Silver has a market cap of $347.81 million and an enterprise value of $293.63 million. The stock trades at a trailing price-to-earnings of 39.86. There are currently no analyst estimates for their future growth rate. The current short interest as a percentage of the float for Great Panther Silver is an extremely low 0.4%.
From a technical standpoint, traders should look to get long GPL once the stock takes out some overhead resistance at around $2.71 and then $2.79 (its 50-day
) on heavy volume. A move above those levels with volume that's tracking in close to or above its three-month average action of 1.73 million should set this stock up for a big spike higher.
is a precious metals company engaged in the exploration and development of mineral properties situated principally in Alaska and British Columbia. This stock has been hammer in 2011 with shares off by around 31%. That said, shares are starting to breakout today and could be preparing for a sharp move higher.
52-Week Range: $5.93-$16.90
Today's Volume: 1.16 million
Three-Month Average Volume: 3.41 million
NovaGold Resources has a market cap of $2.32 billion and an enterprise value of $2.24 billion. Their estimated growth rate for this year is 91.30% and for next year it's pegged at -237.50%. The current short interest as a percentage of the float for NovaGold is notable at 6.8%.
, this stock is starting to trigger a major breakout today as shares push above some past overhead resistance at $9.50 a share. Traders should look to play this breakout with a mental stop just below $9.50 in case it fails. Target a run back towards $10.82 (its 200-day moving average) and then $11.55 a share, which is the next significant overhead resistance level.
is a mining company which is also engaged in the exploration for, and development of, gold and silver deposits in Mexico. This stock has basically traded flat on the year with shares up around 0.72% so far in 2011. That said, the future gains could rack up quick for AUQ if the stock breaks out in the coming days or weeks.
52-Week Range: $6.15-$14.17
Today's Volume: 751,900
Three-Month Average Volume: 2.39 million
AuRico Gold has a market cap of $1.73 billion and an enterprise value of $1.57 billion. The stock trades at a trailing price-to-earnings of 23.14 and a forward price-to-earnings of 7.65. Its estimated growth rate for this year is 137.50%, and for next year it's pegged at 71.10%. The current short interest as a percentage of the float for AuRico is low at just 3.6%.
From a technical standpoint, traders should watch for a big breakout to trigger for AUQ if the stock can manage to move above some big overhead resistance at its 50-day moving average of $10.58 and then $10.60 a share on strong volume. A move above those levels should set this stock up for a big spike that could take it back towards $13 a share or possibly even higher.
AUQ is one of the
First Majestic Silver
First Majestic Silver
is engaged in the business of production, development, exploration and acquisition of mineral properties focusing on silver in Mexico. This stock has been in a strong uptrend in 2011 with shares up around 20% so far in the year.
52-Week Range: $7.33-$26.88
Today's Volume: 362,433
Three-Month Average Volume: 1.49 million
First Majestic Silver has a market cap of $1.81 billion and an enterprise value of $1.65 billion. The stock trades at a trailing price-to-earnings of 22.61 and a forward price-to-earnings of 13.62. Its estimated growth rate for next year is pegged at 10.30%. The current short interest as a percentage of the float for First Majestic is very low at just 0.3%.
From a technical standpoint, this stock is setting up for a major breakout if shares can manage to move above both its 50-day of $18.74 and 200-day of $18.78 on
. Traders should watch for a high volume move through those levels that's tracking close to or above its three-month average action of 1.49 million shares. If that breakout triggers, then target a run in this stock towards $22 a share or possibly much higher.
Northern Dynasty Minerals
Northern Dynasty Minerals
is a mineral exploration company, which holds indirect interests in 627 square miles of mineral claims in southwest Alaska, the United States. It owns 50% interest in the Pebble copper-gold-molybdenum project located in Alaska. This stock has been hammered by the bears in 2011, with shares off by over 40%.
52-Week Range: $4.87-$21.76
Today's Volume: 114,600
Three-Month Average Volume: 535,212
Northern Dynasty Minerals has a market cap of $791 million and an enterprise value of $711.60 million. Its estimated growth rate for this year is 33.3% and for next year it's pegged at 70%. The current short interest as a percentage of the float for Northern Dynasty is very low at just 1%.
From a technical standpoint, traders should watch for a
to trigger if this stock can manage to move above some past overhead resistance at $8.82 a share on strong volume. A high-volume move over that level should set this stock up to re-test its August highs of $10.50 to $11.07, or possibly much higher. Look for volume that's tracking in close to or above its three-month average action of 535,213 shares. One could buy this stock off any weakness and simply use a mental stop near the 50-day moving average of $7.93.
To see these stocks in action, check out the
-- Written by Roberto Pedone in Winderemere, Fla.
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At the time of publication, author had no positions ins tocks mentioned.
Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.