We were a step behind Newmont's swan dive yesterday, bidding 1.35 for some June 50 puts that stayed well out of reach. They opened at 1.60 and traded as high as 2.15 intraday on relatively strong volume. The chart that I used to justify a change of heart concerning Newmont (and other mining stocks) is not subtle, as you can see. The divergence between rising price tops and a falling MACD shouts for attention: We've steered clear of mining shares for the last month or so, queasy about the toppy look of some of our favorite stocks, including Newmont, and of physical gold itself. The good news is that it probably won't be long before we can try a little bottom-fishing. Corrections in powerful bull markets are usually punitive but fleeting, and we don't expect this one to be any different. To be specific, if April Gold were to retrace 0.618 of the rally begun two days before Christmas from around 496, that would bring it down to 528.20. If so, then this correction is already nearly half over, price-wise. Here's a chart that shows it: *** No Avoiding Deflation� Here's yet another persuasive essay from Prudent Squirrel Chris Laird that nicely deconstructs the inflationists' feeble fantasy that the Fed would never 'allow' deflation to happen. I reprint it below with the kind permission of the author: I keep reading inflation and deflation analyses that say: 'the Fed can print until there is no tomorrow, so deflation will never happen..' Ok. SO the Fed prints until the dollar's value drops to zero. Who says that means there will still be demand/transacting from the consumer? If the value of a currency drops to zero, then it hyperinflates, but that does nothing for real economic demand. The US consumer is 70% of the
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