Newcrest’s mangement team are working hard to overcome legacy issues. Two investor concerns are intertwined – unforseen operational difficulties leading to sub-guidance performance. However, for the last eight quarters, NCM have met or beat guidance. This represents a better operational performance, and an understanding that companies should “under promise and over deliver”.

This may be why NCM is up more than 20% against a gold price rise of around 7%. NCM failed on Friday at $13. More importantly, the price action is all over the shop – disconnected from previous trading (green circle on the chart), with significant gaps between trading days. This is a sign of instability in the price, and often accompanies a false or corrective move.

Naturally, NCM’s share price is tied to gold. On any given day it may track or invert the gold performance, but over time must follow. Those who see overhead resistance for gold, possibly on the back of a stronger USD, may consider shorting NCM as a leveraged play.

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