Year: 2012

NEM, Newmont Mining update

Hamilton

See our previous blog of April 27. Then we assumed the whole process was starting with a 1-2, 1-2. In this count we abstract from that. For the moment there is little difference in the outcome, first stop was expected at around $39. Here are the charts again;

nem jul 2012 bnem jul 2012 s

At today’s low the stock is down 40% from the recent peak. There are two big picture counts with either a 5th wave from the lows in 2001/3, or a large B-wave that coincides with gold’s 10/11 year rise over the same time, from about 300 to 1900 an ounce, double the increase of this stock! Either way we should revisit the $15 level before all is said and done.

NKO , NIKO Resources Ltd. update

Hamilton

nko jul 27 2012nko jul 2012 s

Unfortunately we do not have tick charts any longer than 10 days, so we are looking at an incomplete picture. Today Draghi, Bernanky and Pan Gongshen came out with a joint communiqué in which they expressed their unreserved conviction that Niko should close the gap at $21.21 and they promised to do whatever was needed to get it there. Just kidding.

This looks like the start of a third wave (starting from around $13), you are already up 30% or so, why not enjoy the ride. It may go a lot higher!

AEM, Agnico Eagle update

Hamilton

See Febr. 7 and 17 blog. Here is big picture, very much like ABC but a lot more volatile;

aem jul 26 2012

Notice that over the past ten years or more this stock followed the pattern of ABX. We do not see the triangle as clearly but one could imagine one. In any case this stock is probable in wave 4 (which we anticipated back in Febr. of this year). By the way if you are still long the stock from $35 you may get a second chance to sell at about $45. On a proportional basis Agnico is well ahead of ABX having already lost 2/3 of its value which would be around $18 for ABX.

ABX, American Barrick

Hamilton

We have never been all too fond of this company and became downright negative after RBC put it on its focus list quite some time ago. Here is why;

ABX jul 26 2012 l

For a number of years during the late eighties this stock, and also Franco Nevada to mention but one other, was the darling of gold speculators expecting a repeat of the metals performance from roughly 1973 to 1981. Instead they got one of the best formed triangles ever, lasting a little over ten years, (I was focused on Hecla and never looked at ABX).

Triangles occur one leg before the last, which is , of course wave 4. The somewhat violent jump up is called a thrust. Typically it has an amplitude roughly equal (or 1.62X) to the mouth of the triangle, shown here in purple. It is a 5th impulse wave and as such should subdivide into 5 waves. It shows overlap but that is OK as it is a “diagonal” with a nice throw-over at the end. The A makes it right to the lowest level of the e-wave. The B-wave makes a new high and now the C is on its way down to about $17. Here is an old chart from Jan. 2011 showing the B-wave in detail and a chart of what to expect as of today.

abx jan 14 2011ABX jul 26 s 2012

Notice (click to enlarge) that the B-wave is also perfectly formed. After the top we get a rather messy 1-2 that consumes an entire year without going anywhere. Then wave 3 of C which took us to the low of $31.18, almost a drop of 50% just in the third wave, money you could have saved reading previous blogs. A pretty good rebound should now follow for wave 4 and it could again take a whole year! It cannot trade above $46 for this scenario to stay valid. $42 is a better guess for the rebound. After that wave 5 will take the stock to around $17 or so. What a hedge!

So it is a buy now for a gain of about 30% (from today’s low) , then neutral at $42 and a short above, say $44.

PS. Wave 2 is messy, I have used blue to show the composition. It is irregular and consequently I would expect wave 4 to be a sideways “flat” or again a “triangle”.