NFTRH; Gold Macro Fundamentals

With NFTRH 290’s 29 pages, we did not get to the gold macro fundamentals segment this week.  So I want to put up a brief update to go over a few charts.

We had noted that the TIP-TLT ratio (an ‘inflation concerns’ indicator) was approaching important support, and that the inflation case needed to not make a lower low to 2013’s blue arrow.  It bounced last week as the US dollar took a drop.

Also, the 10 year to 2 year Treasury yield spread has turned up above a support level after making a lower low to 2013.  These should both be watched closely as gold is probably not going anywhere without them (esp. the 10-2 spread) turning up.

tip.tlt

Gold vs. commodities by daily view has been creeping up since late April and this must continue through the 50 day MA’s.  When Au-CCI rose to and through the 50’s in December/January, a very good rally cropped up.  We’ll keep an eye on this one too, for both rally indication and gold sector fundamentals.  Note that gold is and has been in a downtrend vs. CCI for over 2 years now, and that has not coincidentally accompanied gold’s bear market.

au.cci

Gold vs. Industrial Metals topped out in March and must bottom and resume climbing for a real bullish phase in the precious metals to be indicated.  A strong global economy supports the industrial metals and in the US that is the case.  In China, Europe, etc. it is not so much the case.  This is a definitely a cyclical/counter cyclical indicator.  Gold needs a counter cycle for a healthy bull.

au.gyx

Gold vs. the US stock market continues to be nowhere.  Similar to Au-CCI, a rise in this ratio late in 2014 helped indicate a move to risk ‘OFF’ by stock market players.  As the stock market bounces now, gold is back in Palookaville in SPX terms.  We should watch for strengthening in ratio to SPX to confirm that any bounce in gold is real.  For the preferred bullish outlook, it should not rise with the stock market.

au.spx

Finally, we have discussed how the Banks turning down vs. the broad US stock market (SPX) is a positive for gold.  We’ll close with a look at the Au-BKX ratio which, while not bullish is not bearish either.  It is consolidating between the 50 and 200 day MA’s.  A rise in gold vs. the banks could be interpreted as a decline in confidence in the US financial system.  It will interesting to see which way this breaks.

au.bkx