NFTRH; Econ Data, Markets and Gold

So the Swiss gold vote caused a sizable ruckus in gold and silver overnight.  This morning there is a nearly as sizable recovery in the metals.

The Swiss vote is an important hype component to get behind us and a positive reversal today would be notable, given the already over bearish sentiment profile (cue Citi’s Willem Buiter with a hysterical rant against gold leading in to the Swiss vote).

More important than any of these hyped up flashpoints however, are the fundamentals.  In that regard gold bulls would want to see signs of US economic issues (joining much of the rest of the world).  Here is this week’s economic calendar, featuring ISM at 10 ET today.

econ
Source: MarketWatch

As noted in recent weeks, we are watching the Semi equipment book-to-bill and by extension, the manufacturing sector in general for signs of economic deceleration (in light of the strong US dollar).

Major US stock index futures are down about .4% on declining oil and China, according to the headlines.  Headlines always seem to find reasons, but for our purposes the idea has been that any downturn in the first half of December may be watched for potential for traders to position for a Santa rally later in the month, if applicable (we’ll evaluate markets along the way).

Back on gold and in particular the gold stock sector, the phase of declining fuel costs puts miners of relative quality out front, ahead of royalty companies in my opinion.  The relatively richly valued royalties are stuck with a downward pressured price of gold while miners, with their beaten down valuations, would theoretically leverage the Gold-Oil ratio, which has been rising.

But none of this is applicable beyond a potential trading environment until such time as economic data start a trend toward deceleration.  The gold sector in that event would be set up as not only the most hated sector in the world (contrarian bullish) but also a value given improving fundamentals (ref. Q4, 2008).

We have a long way to go, but the next pertinent data release is this morning at 10:00 with ISM.  The next biggie is ‘Jobs’ on Friday.  Meanwhile, short-termers can watch the gold sector today for signs on whether it is prepared to use the Swiss vote as a negative flash point and contrary rally indicator.