NFTRH; Gold Sector, Gold Ratios, Markets and Indicators Using Weekly Charts

Yesterday we noted the declines in some of the gold sector’s fundamentals by daily charts.  Let’s update the bigger picture weeklies of these and other items to see how they’ve shaken out so far this week assigning a brief interpretation to each.

Gold vs. US and European stocks has dropped and could just be filling the August ‘risk off’ gaps, but the charts are no longer constructive.  Gold vs. Toronto is also losing its constructive look.

gold vs. us stock market



Gold vs. Commodities is still okay on the big picture and so, with all due grind and patience, we remain on a theme of global economic contraction.  But boy, does it require patience.


Gold vs. Crude Oil is very similar.


And Gold-Copper.

Gold-Euro has taken a hit, but is stable.


Gold-Canada Dollar as well.


Gold-Aussie is stable.


The weak Gold-Silver ratio would be bullish for the sector if gold and silver were rising or stable.  This is however, only a positive for regular markets with gold and silver each declining.

Banks like the rising interest rate theme and gold does not.

Gold does not like it because short-term rates are rising faster than long-term rates.


Here are the spreads between the 10’s and the 2’s.  Interestingly, 10-2 is popping a bit and that is how the yield curve is traditionally calculated.  The 10/2 at top is my more conservative way, in trying to keep us out of harm’s way in a bear market.  We’ll consider both.


S&P 500 and the 30/5 year yield spread.  That would-be stock market right shoulder is getting mighty tall and the 30-5, which we have shown goes hand in hand with big downturns in the market in its early phases of rising, needs to turn up soon if it is going to play that role in the near-term.  An aside from a awe struck market participant:  Haven’t we seen this movie before where it seems all markets need is a couple policy makers talking about extreme inflationary policy on one end and another one holding participants under its spell month after month as it decides when to begin normalizing policy?


Folks, this is and has been what gold is doing.  What it is doing is going down in a bear market.  We have similar charts for HUI, silver and the silver-gold ratio.  Because I hate the implications of what was highlighted directly above, I always pay attention to and value gold as a monetary asset (not money).  But the chart says ‘bear market’ and will continue to say that until first 1300, then 1400 are put in the rear view mirror.


Meanwhile, if you click this chart to full size you’ll see the parameters on a would-be gold stock bull.  As it stands now, the sector is correcting with HUI not quite dropping to the 110-115 zone and GDX stopping just above the 14-14.50 zone so far.


Risk seems to be coming back ‘on’ in the markets and most recently we are watching the ‘catch up’ plays like the small caps for signs of how much more ‘on’ it can get.  This is a dicey situation with the S&P 500 knocking on the door of our upside parameter (between ‘bounce’ and something more).  We reviewed the daily parameters in NFTRH 367 and at Biiwii yesterday.  Here is the weekly view.

In closing above 1180 for the 2nd day in a row yesterday RUT increased the odds it could pop to 1280 (in conjunction with all those daily chart patterns we have been noting in many stocks and markets).  That would clear the last key resistance level and probably see the major indexes at all time highs.  1190 to 1200 is critical resistance and a factor in the coming decision between whether this will be seen as a bull party or a suck in and heartbreak for bulls.


In other words, bulls are right on the verge of taking the bears’ ball back.  Being squarely a risk ‘off’ asset, that would probably keep gold’s price in the grips of its bear.  Just some bigger picture perspective to consider.