Because it is so important to our macro work, let’s update again the counter-cyclical metal vs. some positive cyclical items, using the respective ETFs.
Gold/Oil continues to work at grinding the SMA 50. Implication: counter-cyclical macro indicator, gold mining fundamental indicator.
Gold/Palladium continues firm. Implication: counter-cyclical macro indicator. Palladium goes with the happy stuff and gold… not so much.
Gold/Industrial Metals is less pronounced, but constructive. Implication: counter-cyclical macro indicator.
Gold/Silver (GSR) gapped up with the market’s disturbance and has thus far refused to yield. Implication: this has been a potential 4th Horseman of the Apocalypse, i.e. an indicator of waning market liquidity for a time when the happy-go-lucky Amigos (Gold vs. Stocks, Long-Term Yields & the flattening Yield Curve) reach their limits. As long as GSR remains up trending expect pressure in stocks and risk ‘on’ asset markets. Other Implication: the ratio pressures gold miners as well but its implications improve the miners’ macro and sector fundamentals so, it’s complicated.
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