NFTRH; Payrolls, Precious Metals, Yields & Inflation Expectations

I was out for the early morning and that is probably a good thing because any updating would have been meaningless with the payrolls report not yet released.  I for one, suspected it could be firm but not nearly this firm.  Treasury yields have backed up and this is not at all a good backdrop for gold, considering that the spreads are showing short yields up vs. long yields.  I sold my DUST hedge, but if this looks to get worse, I’ll have to sell the miners it was hedging as well.  I am letting the situation breathe for the moment.

The normal pullback target for GDX was 14 to 14.50.  It is now at 13.53.  I can take price declines (if fundamentals are constructive), but we noted that fundamentals were lurching to unfavorable earlier in the week and with the jobs report and yields, that is only intensified.  So this is where the part about not being sponsors of the sector comes in.  If I feel the miners can get sold out and ready for a bounce, I’ll hold my small group.  If it looks to get worse, unprotected as I am, I’m going sidelines.  A weekly close below 13 would not be good at all.


One ray of hope for the sector and for commodities is that inflation fears can start to work their way into the system, with the jobs data provoking a ‘push inflation’ theme.  Item 1 is the TIP-TLT ratio, which is bouncing, implying a bounce in inflation expectations.

tip tlt ratio

Item 2 is the Silver-Gold ratio, which usually gets hammered when the sector does.  It is curiously holding stable.


Just a few knee jerk thoughts post-jobs.