Gold Miner Fundamentals (Macro & Sector)

We have long discussed waiting waiting and waiting some more… for an opportunity to buy this sector on price destruction while at the same time its fundamentals are improving.  I want to pop up a few charts showing the sector and macro fundamentals.

The gold stocks as a sector are continuing to break down today (from little bear flags).  With global stock markets also weak, it pays to keep an eye on the fundamental backdrop since the play is to one day (maybe soon) buy the washout.

Gold vs. Crude Oil is up again.  Recall our concern that the post-Q1 decline in gold-oil would show up in the coming Q2 numbers.  A resumed rise in this ratio (that endures) would paint this decline as a buying opportunity from this funda perspective.

gld.uso

Gold vs. Palladium is up again (as PALL-Gold is bearish on the weekly charts we usually follow).  The negative PALL-Gold signal is a macro thing, a potential early sentinel scouting for future economic contraction, which is a long-term positive for the gold sector.

gld.pall

Gold vs. Commodities is up, but not conclusively in a resumed uptrend.  This is a duller version of the two above.  A future indicator to resumed economic contraction.

gld.dbc

Gold vs. broad US stocks is still nowhere.  This ‘funda’ sure is stubborn and could lag.

gld.spy

Gold vs. hedged Europe still has work to do as well.

gld.hedj

Gold vs. Silver (GSR) has broken upward.  This is not only a bringer of short-term pain for the gold sector, but potentially for most other markets as well.  But it is important to remember that under our best LONG-TERM view for the sector, it is not only okay, but preferable for the GSR and potentially, USD, to rise together.  But first, pain.

gld.slv

30 year vs. 5 year yield spreads done 2 ways, 30/5 and 30-5 each show a potentially constructive view for the sector.

30.5

There is much more to come but I wanted to give you this snapshot of something that while perhaps uncomfortable for the sector’s perma-sponsors, is proceeding exactly to the best laid plans.  The holdout is gold vs. stock markets.

Remember that our lowest targets on HUI approach 100, amazingly enough.  It is never easy participating in these types of events but all we can do is be ready and armed with as much sensible information as possible.  I would love to see enough funda come in line in conjunction with price destruction so as to finally be able to have the clarity I had in Q4 2008.