Federal Reserve Minutes, Oil, Goldman Sachs, Newmont Mining (NEM)

It wasn't long ago that it seemed no one but us believed "QE" would ever end, and we felt alone in the assertion it'd end soon.  Now: Half of Fed sees QE end late this year.

Next Wednesday and Thursday is Federal Reserve Chairman Ben Bernanke's semi-annual testimony to Congress on monetary and rates policy.  Perhaps there'll be volatility surrounding that. 

Today's release of minutes of last month's Federal Reserve meeting had no effect on equities markets or precious metals, as both ended the day almost exactly the same as before the release of the minutes earlier in the day.

Recently we bought oil.  It looks like the trend is breaking upward, with possible near-term resistance at the previous highs (red lines):

Early this year we warned that Goldman Sachs and silver "should soon break down".  Later that morning GS stock began a 2-month drop of over 13% and silver has since been down as much as 40%. 

In late March we posted the GS chart below, stating: "A chart of the overall market should soon look the same, and we remain confident that GS will connect with its uptrend (in black) later this year while the DJIA proceeds to drop at least 800-1000 points from its recent highs."

Does the overall market look the same?  Here's a current chart of the DJIA.  It did break down 1000 points, but only after first going 1000 points higher:

Perhaps if the market soon breaks to new lows we could argue that the topping patterns are similar. 

What is inarguable is that the GS uptrend has since been met, twice in fact:

A new market decline should coincide with GS eventually breaking that uptrend decisively.  We're of the belief that both GS and the DJIA will post new summertime lows, however for now both look stable.


What of gold and silver?   Bluntly, the price action since the recent lows has been remarkably weak and that's especially true in mining shares.  As of today's close, we're stopped out of our Newmont Mining position for a small loss.  We will hold the shares if by some miracle it opens and holds to close above our $27 stop tomorrow, but that's highly unlikely so we expect to close the position. 

We still have plenty other gold and silver-related longs since recently turning from long-term bears to short-term bullish for a bounce, as diarized herein many times recently.  Here are the posts relevant to this NEM position:

Buying NEM with initial stop at $21.  We noted long-term trend support circa $26, which is still true and hopefully that holds for the desperate longs still clinging to this disaster that's down 63% in the past nine months. 

Here's a look at the NEM trend.  Those not overexposed to miners or precious metals may wish to hold long above that red line:

Most importantly, when buying NEM we'd warned: "The vast majority of people bought at higher prices, some far higher.  In other words, the majority took a loss or are still holding on at a loss.  Don't become one of them.  Stay away from risk or at least use prudent stops if you participate."

Accordingly, we later raised our stop to $25 and finally to $27.  Enough is enough and while it's both disappointing and disconcerting that NEM has continued to slide despite stock markets going higher and gold and silver bouncing a little, we're not so much worried for this loss as we are for the remaining long positions relating to gold and silver.







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