NFTRH; Gold Sector Fundamentals

Gold stocks are in the resistance target zone, so understand that negative reactions are becoming more likely.  But I want to make a point that unlike the hype surrounding Ukraine and Iraq (i.e. geopolitical problems) that we discount as a fundamental underpinning for the gold sector, the headlines now coming from Europe and in particular Portugal are an actual fundamental underpinning because they speak directly to what is wrong with the debt leveraged financial system and our reasons for owning gold and/or the miners.

This headline is not necessarily a bearish thing for US stocks (which in my opinion have been due for a correction for other reasons), but the fact is that a macro issue is popping up in Europe and this is the reason one owns gold, not because Russia is going to grab Crimea.

headline

So I wanted to give some other snapshots of gold sector fundamentals, starting with gold-oil (GLD-USO), which is particularly important for the miners.

Gold-Oil is rising:

gld.uso

Gold-Commodities is rising:

gld.dbc

Gold-US Stock Market is rising:

gld.spy

Gold-European Stock Market is rising:

gld.ezu

Technicals are one thing and fundamentals another.

Technically, it looks like the gold sector is making a big bottom to a potential bull market.

Fundamentally, things are coming in line by the charts above.  This needs to continue.  Also, the CoT structure – which is bearish for silver and gold – is a fundamental consideration.

If all goes well for the sector, a buy the pullbacks regimen could be engaging or as gold stock analyst Jordan Roy-Byrne noted a ‘make like Ole’ Turkey’ regimen where you hold a bull trend.  Meanwhile, things could get dynamic… both ways.