NFTRH; Reading Into the Moves in Gold, Commodities and USD (High Priority)

Consider this update something of a sketch book of possibilities by one market watcher sorting through his thoughts.

Gold did not hold its December 2017 low of 1238. Next in line as support is its July 2017 low of 1204.

Considering the seasonal pattern that bottoms in July and what now must be pervasively bleak gold bug sentiment, I just cannot feel bearish. The best buys in the gold sector are when MAX PAIN are in play. The main problem remains the not yet positive fundamentals, which would need the risk ‘on’ items to take a hit as well. Especially the US stock market, which is and has been top testing. But as a stand-alone, the gold sector often bottoms amid angst and fury as the inflationist bugs make a final puke.

The interesting thing is that gold is not going down in a vacuum. It is kept company of course by silver (which may be about to lose its December 2017 low) and inflation/reflation beneficiaries like the bearish copper/industrial metals and palladium. This signaling, for a supposedly reflated economy, does not look positive. Yet stock prices continue to grind upward.

Let’s keep in mind the progression where gold leads the inflation trade. It bottomed in December 2015 and then silver, gold/silver miners, commodities and stock markets followed, roughly in that order. I would not be surprised to see gold/silver make a final dump to a perhaps washout low that proves to be the basis for a substantial rally. This could lead an eventual rebound in commodities, inflation expectations and eventually stocks (after a correction). But first gold could be leading the whole raft it tows lower, with stocks not yet getting the memo.

All of this could coincide with the USD finally taking a pullback. It has exceeded what I thought best for the short-term bear case, but it has not yet negated the pullback scenario.

What I like about this market is that it seems everything is in motion. Chaos seems to be gathering. It’s time to be cool and have a plan. The above is a plan and nothing more. We’ll track it closely to see how it evolves or negates. The 2nd half of July could be pivotal for many markets.