I lived through the commodity boom in the late 70's when gold began futures trading in the U.S. around $200 and corrected to $100 before soaring to $850 a few years later.
Many remember how silver rocketed from around $1.40 per ounce to $50 with the help of the Hunt brothers. It wasn't safe to wear gold necklaces on the subway. Storefront shops popped up everywhere to buy your unwanted gold and silver. Those were wild times with shortages of coffee, orange juice, soybeans, wheat, oil embargoes and unions demanding Cost of Living Escalator Agreements (COLAs) in their contracts.
Yes, Virginia there was inflation. We don't seem to have that runaway-like inflation of the 1970's but some would argue that paper currencies are in a race to a bottom and gold and not bitcoin makes sense.
Over the past six years the price of gold has been depressed and the U.S. dollar mostly strong. Investors have been wise to shun the precious metal for other assets and sectors like technology stocks that have been huge home runs. Our own Jim Cramer has done an excellent job in identifying those tech leaders.
Let's now take a look at the charts of NEM and see if this buy recommendation will be more than a gleam in our eyes.
In this daily bar chart of NEM, below, we can see an uptrend from a July low. Prices have made higher lows and higher highs for 10 months and the uptrend will be refreshed if NEM rallies above $42. NEM is above the rising 50-day moving average line and the rising 200-day line.
The daily On-Balance-Volume (OBV) line has swung up and down and up and down with the price action and unfortunately does not indicate sustained accumulation.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and has just signaled a take profits sell.
In this weekly bar chart of NEM we see that prices have been above the rising 40-week moving average line since July. The weekly OBV line shows a rise from July but also a turn lower from January. A little confusing. The weekly MACD oscillator is in a bullish mode.
In this Point and Figure chart of NEM, we can see a strong bottom formation and a trade at $42 will be a double top breakout and give us price targets in the $49-$52 area.
Bottom line: I think a long exposure to NEM makes a lot of sense. Not because I am a gold bug or a quantitative analyst. I think you should be long NEM because the charts are bullish. Traders should consider buying NEM on strength above $42 and above $46 looking for gains to the $49-$52 area. If gold can break out over some resistance in the $1,350-$1,380 area then our price targets are probably conservative.