This morning we noted…
Point being, the GSR has not broken down. It is pulling back on the concept of “Fed relief” that we’ve been discussing for months now. In my opinion, the broad rally – and likely this phase of the gold/gold stock bull – will be tied at the hip, to a degree. Ending phases would likely be indicated by a rise in the GSR and stabilization at least, in the USD.
So for now, party on Garth. But understand that we are probably in the final phases of the initial launch to much higher levels in the metals and miners later on. It’s all part of the Q4-Q1 rally projection from last November.
It is no surprise that the reversal in gold stocks (and especially the stuff that should get reversed on failing inflation, like commodities and commodity producers) have reversed. There is a reason we watch indicators like this and now we watch closer.
The GSR has hammered back but is still below the resistance line. When the above quotes were written this morning it was dropping hard. Now, it’s not as comfortable being an inflation bull (or a gold mining bull subject to the knee jerks of inflation bugs). Nothing is resolved today other than an in-day reversal and it’s actually a normal FOMC week. In my view, this thing – like the inflated macro it addresses – can go either way in the short-term, especially with Payrolls on the way in the morning.
