Gold, Silver and Newmont (NEM) Update

Our last update was July 11.  Apple did hold those gains, then went higher, and we did book the gains on those AAPL calls a few days later, for a gain of roughly 350%.

Since then, we've been enjoying summer and hope our readers have too.  Nothing has changed in our views or positions, so we felt no need to add to the market noise.  This in itself is instructive.  While most everyone feared extreme volatility surrounding Ben Bernanke's semi-annual two-day testimony before U.S. Congress last Wednesday and Thursday, followed by Friday being the last day of trading for July options, in fact it turned out to be one of the least volatile weeks of the past year.

Statistically, that is not unusual.  Pundits need to fill space and fabricate, both out of ignorance and inexperience, reasons or attributions for market moves when in fact most moves are common and well within the norm no matter what the news of the day is.  Recall this was the case back during the Cyprus "crisis" as we pointed out at the time, and it is often the case at options expiry.  Simply, always have a plan and always trade your plan without 2nd-guessing ... so long as it is a prudent plan.

Similarly, today's jump in gold and silver is nothing to get excited about.  Both are still way down from levels of even six weeks ago and the expected bounce so far has been uncertain, small, and slow.  The chance of the recent lows being "the" bottom, as so many hope, is very near zero.

Those new to the blog, especially gold or silver bulls, are strongly encouraged to read all entries from at least the past two months.  Those who read us regularly are aware of the industry-leading accuracy we've enjoyed with respect to calling, and profiting, from moves in precious metals. 

Over the past month, we turned bullish on gold and silver for the first time since the highs in 2011, and with today's pop upward we seem to have been correct, and right on time, yet again.

A downtrend in GDX, the gold miners ETF, seems to be broken:

However the actual metals are still far from a bullish turn.

See first the "gold gaps chart" we last updated on July 07.   What we wrote then turned out to be exactly accurate, as today GLD hit $129.46  If GLD can move decisively above that $130 level, and above the downtrend shown in red on the charts in that post, we can perhaps start to expect it'll revisit levels above $140.

Of course silver will move essentially in tandem with gold, up or down.  Other key charts can be seen in this posting from July 11. 

We don't feel there is value in updating those charts yet, as the key trends illustrated are still in effect.

We do feel it's prudent to raise our NEM stop to $28.50 on a closing basis.  We've gotten lucky with that one, especially compared to the vast majority of other longs in the stock who can only dream of someday stopping out at a profit.  When we entered NEM on June 27, we suggested that circa $26.50 was a prudent conservative stop level.  Nine days later the low, so far, was $26.47 

Here's how NEM looks currently, short and long-term:

We'll try to ride the rally in mining stocks, and metals, until near the top of the bounce.  Our luck or timing may run out eventually, however we're totally confident it is only a bounce though it might be a protracted one so we could be holding long for awhile.  As usual, and ironically, despite being long metals and bullish the past while, we are still against the grain and that's when we're most comfortable and most profitable.  Once the herd is again bullish and buying rabidly, we'll be shorting. 

Again, the long-term outlook by any technical, logical, or fundamental analysis is for much lower prices in gold, silver, and miners.


The following article suggests nothing new to readers of this blog, however such important points are worth reiterating and sometimes that's best done via a fresh source: Gold is a popping bubble, too 

The author's "5 bubbles investors need to watch" is also worth consideration.

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