The Gold Economy

Newmont Mining Corporation (NEM) released an update Friday, including a dividend payment. It was not well received by the investment community: The stock price fell 7.36% on massive turnover of 19.1 million shares, which is twice the daily volume.

We will start with a quick look at the chart where we can see the golden crossover of the 50 DMA crossing over the 200 DMA in a downward direction, this is usually a rather negative sign for stocks. The technical indicators have also turned negative and are

Backwardation is a situation where the spot price of a commodity is higher than the forward futures price. Generally, the price of a commodity is more expensive in the future because of storage costs – and that situation is called Contango. Contango is the usual situation, and Backwardation is somewhat unusual, as it means that a premium is being paid to own a commodity now rather than in the future – and it often means there is a shortage of that commodity. For example, buying wheat for delivery in the future does no good if you are hungry today

In my most recent article (on February 7, 2011), I spoke about the probability of a silver price explosion. The futures market was selling at remarkable levels of backwardation and the spot price was hovering in the range of $28 or so per troy ounce. I expected the price to rise substantially in the very short term future. That prediction was correct. Less than three weeks later, prices are now hovering in the $33 per troy ounce range, just shy of an 18% increase in price. That qualifies as incredible performance from any asset.

Most astonishing about the price

Try as we may we just cannot get excited about Yamana Gold Incorporated (AUY) it is range trading at a time when gold prices are close to hitting new highs. This stock touched $14.00 in November 2009 and here we are as of Friday closing at $12.60. Still, Thursday, Yamana Gold published figures regarding its mineral reserves so we will take a quick look at the highlights.

Yamana’s mineral reserves and mineral resources for the year ended December 31, 2010. The Company’s total proven and probable mineral gold reserves