Newmont to 200

Aztec had some nice drill hits. What I want to point out is that there are more than a few charts like this because the overall sector has a similar look. The stochastics (lower indicator) are in the oversold zone. Stocks can stay overbought/oversold for a long, long time on the montly time frame. By itself this isn't bullish. There is also falling volume. By itself, not bullish. However, the price has refused to drop. That says this is a firm base from which a new bullish advance can begin. A break of this price level would be very bearish given this backdrop.

Here's a short-term price chart.

A panic washout in gold mining remains possible. Investors think inflation will ignite the sector and there isn't really bearishness sentiment. It could be that the sector investors are right to be bullish and the mainstream are idiots for not buying dirt cheap stocks at historically depressed valuations. There is doubt though, and that could give way to panic selling if the broader stock market turns south and takes everything with it. There will be a generational buying opportunity if that happens.

Speaking of cheap miners, Nemont yields 3.80 percent. If gold prices rise to $2500 and $3000 the yield on today's price will rise above 5 and near 7 percent. The chart is interesting at this juncture with the inflation/disinflation arugment still going on at least in my head. If the economy is trapped in the post-2008 slowdown caused by the debt bubble, then Newmont might be stuck in the same 40-year channel.

Might, because I think the gold miners will do best in a deflationary environment, followed by stagflation. If a deflation or stagflation triggers a powerful new bull wave in gold miners, then Newmont looks like a gigantic basing pattern with the stock finding support at a former resistance area. The 2011 breakout was a false breakout and this one will be the real one. The measured move would take Nemont up about 50 percent to the $90 area, but really the move would probably be the first phase of what will eventually be a 350-percent rise to $200 per share, with dividends pushing the total return above 400 percent. If one of the large-caps in the gold sector rises 400 percent, finding 10-baggers among the juniors should be like shooting fish in a barrel——provided investors employ a modicum of research and avoid the hype and poorly run firms...no small task in this space.