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THE
MAGNIFICENT SEVEN Background:
Environmental Sarsaparilla - Andean watershed, cyanide, mercury, plastic liners, corruption, guerillas, contractor’s trucks, water sampling, French, and tons of rock. Can Peru afford to do without mining? Eight thousand workers are employed at Yanacocha’s mountain: Charts 1 - 6 show the Magnificent Longwave (Weekly) Cycles as they look riding thru Big Newmont and into the future. The main “horses” are 14, 28, 64, 104, 152, 204 and 400-week cycles. Chart 1 shows the match of these seven cycles versus the actual closing weekly prices (detrended) for Newmont from 1983-1989. There was a major reversal in gold prices in Jan 1987 and later a market crash in the same year!? Chart 2 shows the seven cycles versus the actual weekly closing prices (detrended) from 1990 -2005. This graph shows the downside move that is currently going on in Newmont (and other gold stocks). The trend line for this stock was considered to be a modest 2.8% increase per year (no parabolic rise is assumed at this point). Chart 3 shows the largest cycles from 1983. The largest 400-week (7 year?) cycle is not constant in amplitude. The cycle is growing larger and larger (translation: we have a major (type-Stage II) rally coming off the bottom but that does not occur until after Nov 2006). There is some question as to the period of this cycle as it seems to oscillate from about 370-410 weeks. As you would expect, this same cycle is present POG as a 82-90 month cycle. There are some nice tops formed in 1988, 1996 and 2003 (do I hear a bid on 2010-2011?). The next “Gold Olympics” will be in London in 2012 were the price is fixed each day. Chart 4 shows the predicted prices for Newmont thru 2005. After July 2005, Newmont is showing a significant downtrend. While one might feel that gold stocks should be going up, this stock could get caught in the coming S&P 500 Index downdraft after July 2005. Chart 5 shows the predicted weekly prices for Newmont thru 2006. Again this stock shows a major weakness after April 2006 (there maybe nice rally in stock from Nov 2005 thru April 2006) as does many other stocks in 2006. Chart 6 shows the predicted major cycles from 2005 thru 2006 which shows that Newmont (and indeed gold prices) is in the process of forming a huge “inverted Head and Shoulders Formation” with the bottom coming in late 2006 or early 2007 (the smallest cycle used was 7 weeks). This will setup the Stage II (Nov 06 thru April 2008?) rally (might be completion of only Stage I). The real “buy points” in gold stocks suggested by this method are Nov 2005, Nov 2006 (biggie) and possibly March 2008. The Last Silver Stagecoach (1980+): The media focus was all about the Hunt Brothers (Big Oil) trying to “corner the silver” market but the real winner was in the price of the Fed’s gold (let’s see, 32000 tons x $400/oz average = enough money to influence Governments in 1980). The parabolic rise in “silver prices” resulted in a tectonic up-shift in gold prices without the Fed having to directly intervene as “the price of gold was being revised upwards”. Any Government which directly focused on POG could have caused a panic in the fiat currency – totally unacceptable. Perhaps, the solution was to create a Silver Trojan Stagecoach on which the gold could ride hidden in a strongbox, but now the Silver Stagecoach is just a Ghost Rider in the Sky like a cloud with a distant past. The “Coming Golden Stagecoach”: Chart 7 shows the predicted major cycles from 2008 thru 2012 which shows Newmont and POG will experience a Stage II/Stage III rally (probably a parabolic rise in prices after 2008). This is a not yet a slam-dunk - Peggy Sue. The goldbugs are going to have to hang tough with the badgers and prairie dogs (floods, winds, earthquakes, lightening) if you want a big payday in 2011. Many goldbugs may panic in 2006-2007 and leave a lot of goodies on the table for the rest of the wolf pack. It appears one is going to have to step aside to avoid the Mayan Bear in 2006 (or not) and again in 2011/2012 (this may only be a Stage II rise in this timeframe). There could yet be a Stage III from 2013-2017 in gold/commodities. I like Newmont after Nov/Dec 2006 – solid play for the long term from 2007+ (need to track the coming waveform changes in late 2006). Hey these are my “horses” – please find your own Golden Stagecoach in 2008 to ride. Interesting how 2008 as a date enters into equities in terms of coming significant moves. In the Olympics (2008) in China, perhaps they will have a “golden coin” depicting a Dragon ready to devour the whole world. On the back of the coin we could have a Federal Note with wings flying South for the coming K-Winter. My what big paws you have for a goldbug! You might consider slowly buying some gold coins because one day they may be as good as cash!
DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.
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The
Magnificent Seven is a chronicle about the adventures of
Longwave Cycles who rode onto the “western scene” many
decades ago (would that be in 1913?). In this episode, we look
at a major component of the HUI for the mining sector – Big
Newmont. Newmont is the largest gold producer in the world with
a large land position in some nice gold districts. Founded in
1921 and traded on the New York Stock Exchange since 1925,
Newmont Mining’s stagecoaches probably have a lot of stories
they could tell about the old wild west in Peru where Newmont
owns the biggest gold mine in South America called Yanacocha.
Yanacocha means “black lake” possibly because used cyanide
is dumped into a black plastic-lined basin after washing the
dirt off the mountain top. This process yields an ounce of gold
from each ton of rock and it has been so successful that
Yanacocha’s output has soared to 3 million+ ounces. Yanacocha
sits astride the Andean watershed and its operations have been
the subject of continuing environmental issues with locals and
extremists . The mine spent $16 million on cleaning up an
accident with a contractor’s truck carrying mercury in 2000.
