China, India, and Brazil are all slowing down.
Russia might just have a revolution on its hands, and Europe is still prolonging the Grecian death rattle.
Meanwhile, back in the land of the free, the leading indicators dipped for the first time in seven months due to a spike in unemployment and a slowdown in building requests…
The S&P 500 is rolling over.
Here’s the five-year chart:
You can make the bullish case that there is support at 1,270.
We are sitting at 1,322 as I write this.
That said, the Elliott Wave Theory would suggest we just had our fifth wave (the shortest one at the end), which signals a reversal.
The Good News: Gold Mining Stocks
Gold has fallen off from its highs of $1,900 in September back down to $1,551… but the yellow metal has still returned 137% over the last five years.
On the other hand, gold mining stocks have been sideways to down.
Gold mining stocks are at a historic low compared to the metal.
Historically, the price of gold has traded five to ten times the price of SPDR Gold Trust ETF (GLD). If it returns to the mean of 7.5 times GLD, GLD would go up 60% at current gold prices.
If gold went up in value and the multiple improved, all the better.
The world’s second largest producer, Newmont Mining (NEM), just broke out:
As you can see, Newmont’s shares just bounced off their 52-week low.
They now trade at just eight times 2013 earnings estimates.
If gold goes up on global chaos, money printing, sovereign debt, et al. — and oil prices continue to drop — Newmont could hit $65 rather quickly…
There are other, smaller mining companies out there if you want to add leverage to trades on falling oil prices and global chaos.
All the best,
Christian DeHaemer
Editor, Wealth Daily
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