“Gold Bugs Should Not Look for Conspiracy” Says This Chart

If you see any sources out there talking about a “hit job”, an “attack” or other such language about the precious metals correction, especially in the miners, you should probably flag that source as not to be trusted over the long haul because that source will have identified itself as a promoter, a booster or at best an ideologue.

If you see Men Who Stare at Charts (especially those that were confidently bullish until the last couple of weeks) mystifying you with great tales of the end of the gold stock bull phase because… “look at the similarity to 2016!”, you can tune them out as well. Nominal charts are secondary to macro signals.

Speaking personally (and as noted along the way in NFTRH), I took all the profits I cared to, shorted to hedge the rest, got shaken out of that short and as of last week shorted again using DUST and JDST (plus a couple miners I think less of). But the best course for most traders would have been profit-taking and cash.

There were several reference points to a high risk of correction but to my eye none were more important than this chart, which we’ve had in rotation for many weeks now. Going back to when things were good and bullish we noted both the similarity to and potential difference from the 2016 top. Either way gold stocks were overbought (black dot) relative to a companion macro fundamental (Gold/SPX Ratio) as happened in 2016.

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‘Arrgghh, it’s 2016 all over again!’ will panic the thundering herd. Not so fast.

Another chart informs us that it is nothing like 2016. On that rally of yore it was concerning that CDNX blasted upward and commodities caught on and eventually outpaced gold. Then you know the drill… stock markets got their ass in gear and that was it for the gold sector. By late spring we were noting the degrading fundamentals.

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The ongoing fade in inflation signals is a positive unlike the negative that the scattering herds perceive right now.

When we’ve cleared all the inflation bugs, momos and people following hair-brained logic (and the promoters thereof) it will be time to bull again… if the rest of the macro proceeds as planned. Meanwhile, there are few market things I enjoy more than a good old fashioned running of the more strident and dogmatic bugs.

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