alice, nftrh

Reaction to Payrolls: Confidence Continues to Wane, Gold Reacts as it ‘Should’

We have had a theme that gold will not be favored until confidence wanes in policy making and its ability to control market outcomes.  I thought this morning’s post-Payrolls reaction was very interesting.  In a bull market mindset the headlines might read…

Investors Cheer as Payrolls Puts Fed Rate Hike on Hold

Today’s actual headline at MarketWatch…

Stock Futures Slide After Weak Jobs Report

And then there is gold which, along with silver, was down before the release and is now up about 1.7% with silver up about 3.4%.

Silver is a wild card and is being used as our leader for the sector, but focusing on gold and the gold sector, we again note that today is another Microcosm of what the bigger trend needs to be for an extended bull environment in the gold sector.  We noted later that the Microcosm was expanding.  These are shots of positive fundamentals for the sector.

Again, we tune out all the talk about China Demand, Indian Weddings (“Chindian Love Trade”), missing COMEX gold and all the other stuff that does not matter.  What matters is that a critical mass of investors lose faith – iron clad since 2011 – in the Fed and other central banks’ abilities to control the macro.

Gold vs. Commodities (esp. oil) and gold vs. stock markets are two central themes.  I am still calling this a Microcosm (interim hint) instead of a Macrocosm (a new bull trend) for gold because this morning is an inflammatory event and markets react emotionally in the short-term.  But more of the elements needed, as noted in July in the original segment, Macrocosm, are coming into place…

“On a real change in the Macrocosm, gold would establish an uptrend vs. the S&P 500, the Euro STOXX 50, the TSX, etc.  US Treasury yield spreads would bottom and begin new up trends as stress (inflationary or deflationary) would be indicated within the financial system and the Federal Reserve would not be held in high regard and taken seriously by the average market participant.  In short, confidence would be on the wane.”

We will update the state of the gold vs. stock markets ratios and other items in NFTRH 363.  The process continues…