Yamana (AUY) Still Has Questions to Answer

Yamana (NYSE:AUY) continues to be the company that is always just about to make it, but leaves shareholders and investors disappointed.

One thing it does have going for it, as do other gold equity companies, is the recent sell off, which may have provided a decent entry point, although the company has regained some of that.

As usual, a number of things have to align right for Yamana to provide solid returns, but it also comes with more downside risk than its peers and larger competitors.

The recent sell off has placed Yamana close to its 50 day moving average and in the process of forming a reverse head and shoulders pattern

If the company can find support, it may have the strength to make a decent run.

One major challenge Yamana faces is in currency risks in South American countries where inflation has been rising.

A short-term negative but long-term positive for Yamana is its selling of its 87.5% stake in the Agua Rica project to Alumbrera partners Goldcorp (NYSE:GG) and Xstrata.

As a result, development costs will drop while the company will get a royalty stream once production at the project begins. Royalties with little in the way of capex will strengthen the company going forward.

Yamana closed Monday at $12.48, gaining $0.38, or 3.14 percent.