AMC stock still looks bullish on short-term chart as CEO touts Hycroft gold mine
- AMC stock finished lower on Thursday as the stock lacks direction.
- Overall markets struggle with soaring inflation.
- AMC's investment in Hycroft Mining was touted again by AMC CEO Adam Aron.
AMC Entertainment (AMC) stock finished the day relatively quietly on Thursday as investors across all sectors struggled to predict where the market was headed to next in the wake of soaring inflation. Investors of this generation have no experience of trading in such an inflationary environment as the last such period was 40-50 years ago. It is no surprise that we are stuck in a ranging market rife with indecision. AMC was not immune to this indecisiveness. Having broken out of the short-term triangle formation, AMC stock would have been expected to move higher, but instead it has been largely flat for the last few sessions.
AMC stock news: Is there gold in them hills?
AMC apes got very excited a few months back when AMC invested in a left-field, unrelated business – a gold mine. It caught everyone by surprise and looked to this author to be an attempt to garner more favor with the retail base that dominates AMC's shareholding register. Hycroft was a struggling mining company with one gold mine in Nevada. The mine has been in operation for decades and supposedly involves a difficult extraction process. This has meant that the prospect was relatively unloved by investors and the mine was in danger of being shut permanently last year. In November Hycroft Mining (HYMC) laid off half of its workforce and it looked like it may be forced to close permanently. AMC took a stake in the firm, and the stock rocketed up to $3.10 in March. Since then it has retraced back to $1.
The Hycroft mine in Nevada was previously looked after by Allied Nevada Gold Corp, which went bust in 2015. Reportedly, the firm went bust, because the gold grade was too low to turn a profit. This surfaced again when Hycroft laid off half of its workforce in November 2021. Again it was reported that the quality of gold was too low and at current gold prices not sustainable. Now, investors may be drawn back to the name as AMC Chief Ape and CEO Adam Aron pushes it again via Twitter.
Hycroft Mining hired a new highly respected VP of Exploration. I’m told he thinks Hycroft’s land is a “geologist’s dream“ and a “golden opportunity.” Remember, Hycroft has explored only about 2% of its 71,000 acres. Are there more gold and silver reserves to be found? Exciting!
— Adam Aron (@CEOAdam) July 14, 2022
Given the long history of mining here, it seems unlikely that all of a sudden it has become a geologist's dream find. Therefore, we remain highly skeptical of such a statement. Everyone is entitled to their opinion of course, but history does not look good on this one. Gold prices remain subdued, so as far as we are concerned nothing has changed. The mine was not commercially viable previously, and cash is not going to change that situation. Only a technological breakthrough in making it cheap to get the gold out of the ground or a huge spike in the price of gold might change things.
AMC stock forecast
Now regardless of that sideshow and little rant, there are some positives afoot for AMC. The summer box office numbers are very strong with records being broken and some huge takings for Top Gun: Maverick, Elvis, Jurassic World Dominion, Minions, etc! Also of note is the technical breakout of the triangle formation, which gives a bullish target of $22. So far, so good. The move has stalled now though. The breakout level at $14 remains the key short-term support for bulls or AMC apes!
AMC chart, daily
Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
