Breaking Out: WGX could be set to 'choose its own adventure' and extend golden run

Breaking Out is a new, short and sharp, straight-to-the-point Stockhead column that each week narrows in on breakout ASX stock over a given period. One that’s specifically caught the expert eye of Stockhead contributor Steve Collette – head of Collette Capital in Melbourne.

Gold from the West. It’s a commodity about which everyone has something to say.

Salvation from the system as it exists today, or a relic without functional application in the modern world?

Notwithstanding, it’s hard to deny the price action of late, and price is why we are here.

The chart (below) shows a bit over two-years of weekly price action from $2.72bn market-capping WA gold producer Westgold Resources (ASX:WGX) – just to show off that luxuriant trend.

It’s one of the better such trends you’ll find on the ASX – and achieved despite the gold price itself hardly remaining as linear over the period.

The company itself is touting its newly arrived status as a +400,000 oz p.a. diversified producer, 100% unhedged, all operations in the great West of Oz.

It’s also newly minted a TSX (Toronto Stock Exchange) listing just to keep the North Americans serviced post the Karora merger,

Back to the ASX, and one might argue the rate of gain for WGX is a threat to increase.

The volatility has been creeping up of late along with volumes post-merger, and a steadily increasing profile that comes with the establishment of a top five Aussie producer.

If 260c can hold in the short term, this one has broken out, and looks set to choose its own adventure in the medium term, especially with the possibility of further consolidation in the sector if the gold price itself can remain bid.

First target: 350c.

Collette Capital offers IMA services to wholesale clients only. Learn more at www.collette.capital

Collette Capital is a Corporate Authorised Representative (CAR: 128443) of Sanlam Private Wealth (AFSL 337927), and only provides general advice.

Clients of Collette Capital, including the author, are likely to own shares in the names mentioned.

The advice provided in this report is general advice only and does not take account of any person’s objectives, financial situation or needs. Because of this, any recipient of this report should, before acting on any financial advice contained in the research report, consider (with their financial adviser, if necessary) the appropriateness of the information, having regard to their own objectives, financial situation and needs.

The views, information, or opinions expressed in the interviews in this article are solely those of the contributing author and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.