RE:National Bank Raises NGT PT to $71 CAD from $54Looks like CAD $55.20 on April 9th was the short term top for Newmont NGT as I mentioned was likely in my Apr 8th post. Yesterday, NGT opened and quickly dropped to a low of $52.20 when the US inflation numbers came in higher than expected and it looked like the Fed lowering interest rates in June is now on hold until at least September.
But the gold bulls quickly brushed that news off and the price of gold recovered and seems to be holding near recent highs. So then why is Newmont stock price heading lower (yesterday and so far today) instead of higher? Well, mostly profit taking after the recent 36% stock price run up but also because Newmont investors are not sure where the gold price goes from here. Even the analysts don't seem to know based on the varied gold price targets that range from $2,500 to $4,000. Don't ever recall seeing this kind of spread in gold price projections in my 40 years owning / trading gold stocks and so this raises a red flag for me.
When we consider that the S&P is / was recently up over 30% in the first 3 months of 2024, it's reasonable to expect a bit of a correction. Will it be 5%, 10%, 15% or 20%? With this being a US election year I'm going to go with the 10% bet. I think this correction is just starting these past couple of days and the catalyst was the recent inflation numbers and Fed's rate cuts stall.
My guess is when this wider spread pullback / correction occurs it will take all stocks down with it, and barring some unexpected geopolitical event or change for the worst with the current geopolitical events, that would drive the price of gold significantly higher, gold stocks are likely to trade sideways to lower. Again, given the strong performance of the S&P and the odds of a correction, I'm guessing this will be a 'Sell in May and go Away' year in which the market will correct and then will recover and resume moving upward in Aug / Sep just ahead of the US election in November. So do I believe Newmont will be higher by year end and into 2025? I'm near certain it will but in the interim I'm cautious.
So where do I see the NGT share price going? Well, I believe it is headed to test the 200 DMA average of $51.34 (as of today) and if it breaks down below that, then it is probably headed to about $47.55. My guess is the institutions are already watching and shorting Newmont and will take this below the 200 DMA if the news flow for Newmont or gold price stays stagnant for bit. Argus Research was one institution that is very negative on Newmont due to Newmont management's past inability to not deliver and you can bet they will be shorting this stock at the first sign of any weakness (and maybe already are). The upcoming earnings results (April 25th) for Newmont will need to be very good to drive the share price beyond $55.00 before fall.
I'm very bullish on gold and gold stocks going forward, especially later this fall and into 2025 but right now the masses aren't piling into gold stocks yet and so now is probably not the time to be juming in with both feet.
My opinion only, please DYODD.
HB77