Newmont Mines - A Love/Hate Relationship

Today, I sold the 100 shares position of common stock that I had owned in Newmont Mines (NEM) for the past 5+ months. I expected a bullish move in Newmont and the rest of the gold stocks - and it did materialize - but not before a severe sell-off during early spring/summer that almost had me exiting early and at a substantial loss.

All in all - I lost about $300 in this one (it is not discernible from this p/l statement, but my original cost-basis in the company was $42.10 per share. This did not transfer into the records of my new broker when I switched brokers back in May.):

Needless to say - I hope, prayed, and tried to avoid the results of this trade, but to no avail. I thought it had solid prospects based on a declining dollar, trade deficit, low interest rates, etc. and so on. Instead what happened - was the dollar actually strengthened over the mid-term as the Fed raised interest rates. The gold price stagnated and did not make the major move into the $500 area that I was anticipating.

Here is the chart of the entry and exit points:


With the proceeds from the sale I purchased two positions. One of which was call options in Newmont Mines with a shorter time horizon and higher leverage. I may be forced to liquidate these at a loss - but I plan to watch them for the next week - absent a big break in the stock - in which case that position would be totally wiped out.

My whole thesis has modified a bit - as I expect a rally in gold prices now short term - based on the Government flooding the financial system with liquidity in the wake of the huge hurricane today. I have heard almost no discussion of this on the news or radio - so it is either still under the radar - or it is not going to happen. Neither of which do me any good - so we will see how things end up.

Tough day,

BG