Founded by William Boyce Thompson in 1916, Newmont (NEM) was around over a century ago during Livermore and Wyckoff’s day.
Thompson is center in the photo with President, Warren G. Harding at left.
Wyckoff and Thompson were interconnected.
In Wyckoff’s autobiography, he writes about working for Thompson’s firm (Thompson, Towle & Co.) in 1910.
During that time, he describes no fewer than two stock ‘manipulation’ schemes; one by renowned James R. Keene and the other by Thompson himself during a deal-gone-bad with the Guggenheims.
Also in 1910, Wyckoff published his seminal work: Studies In Tape Reading. If there’s any one book to read concerning how markets work, ‘Studies ..’ is that book.
Wyckoff had first-hand exposure into market operations by the wealthy and super wealthy. More importantly, he saw how those transactions showed themselves on the tape.
Last check, a first edition ‘Studies’ went for around $3,500. A quick search as of this post, turns up nothing currently available.
For those who complain ‘it’s rigged’, to that we can say, ‘it’s always been rigged’.
Determine what those ‘rigging’, are trying to accomplish and you may have a trade.
Now, to the market at hand: Newmont Mining.
It’s the key; the largest cap equity in the Senior Mining Index (GDX).
The daily chart:
For those who have been with this site for a while, you may instantly see the set-up: Spring to Up-Thrust.
The marked-up chart makes it clear.
Moving in a little closer for additional clues:
We can see from the volume itself, there were a huge number of transactions this past Friday.
NEM penetrated long established resistance.
In so doing, it set off a massive number of orders: Buy orders, sell orders, sell-short.
Senior Mining Index: GDX
The other part of the story and the one that weights it to the bears:
While NEM, is at multi-month highs, senior miners GDX, is nowhere near its highs.
Daily chart, GDX:
What does that mean?
It means the market is ‘thinning-out’
The professionals and maybe some investors alike, are abandoning the non-performing lesser cap equities; pouring funds into the last man standing NEM, in hopes that it will keep moving higher.
It’s desperation and signals market weakness.
As always, anything can happen and bulls may somehow take control.
However, from the charts themselves, hyper-stretched major indices coupled with insiders bailing out the most in history, uneducated ‘retail’ willingly stepping up to hold the bag, it does not look good for any bulls … gold or otherwise.
We could find ourselves in a situation similar to the oil market in mid-2014 where it spontaneously deflated for eighteen months … nary a blip higher all the way down.
With that, we’re maintaining short via DUST (not advice, not a recommendation).
If there ever was a CPI report to completely break the ‘inflation’ narrative, this was it.
Several articles, here, here, and here, all saying essentially the same thing … skyrocketing ‘inflation’.
If that really was true, why is the 5,000-year-old hedge against inflation (gold) not responding … and even worse, heading lower?
That’s because, it’s all rigged, man !! (cue, Tommy Chong).
Well, it has always been rigged.
Both Wyckoff and Livermore talked about that ‘rigging’ way back in 1921, when Wyckoff interviewed Livermore about his trading methods. Later, in 1922, a series of articles on Livermore was published in Wyckoff’s ‘Magazine of Wall Street’ (a forerunner to Barron’s).
The point is, we’re not interested in who is doing the rigging. That’s what the press tries to find out (a waste of time). The real question is, what are those ‘rigging’ trying to accomplish?
Answer that, and you may have a potential trade set-up.
We’ve got supply chain, controlled-demolition with corresponding asset price inflation; the kicker is, gold and the dollar, say we’re in some kind of monetary deflation.
Senior Miners, GDX Confirming Trend
Price action in the gold market and the miners confirm that (deflation) assessment … for now.
Zoom-in on trend line contacts.
Based on the articles linked above, if there ever was a data-set release that would launch gold (and the miners) higher, today would be the day … right?
Both Wyckoff and Livermore did not concern themselves with what ‘should’ be happening. They were focused on what ‘is’ happening.
Gold and the miners are (and have been) moving lower.
As yesterday’s post said, we’ll remain short (not advice, not a recommendation) until the market itself says to exit.