NFTRH+; more on the PMs (and Goldilocks) from a macro funda perspective

Last update for today, I promise (I think I promise). :-)

I am back in my office after a scare earlier involving daughter, fainting, hitting head, emergency room. Now hopefully things are okay.

Anyway, while sitting in the hospital waiting area I checked out a few charts and noticed that the Treasury bond funds from last week’s update, while pushed to extremes by the ongoing inflation revival, are not quite broken yet. Here’s the chart from that update as it stands today. Clinging to the previous low by the hairs of their chinny chin chins.

US Treasury bond funds

Let’s take it a step further. If, as hypothesized in this post some of these market signals contributed to PPI and CPI in January (green shaded, which in turn contributed mightily to the recent bump up in inflation fears) by turning up, then if they continue down (copper being an outlier) this month then might we see ‘inflation cooling’ headlines again in March when February data is reported? We might.

Metals and Materials

This is all to say that if Treasury bonds hold up and if rising price signals continue to ease (a lot of ifs) there would be a potential benefit to the Tech-led Goldilocks stuff and also the gold sector, which does not benefit from cyclical inflation. As per the previous update, if things flip hard deflationary or break inflationary however, all bets off.

Let’s leave it with the daily chart of GDX with which we’ve been managing the correction. GDX ticked a lower low to the December low. It’s a bad sign, but it’s only in-day at this point. As noted in the last update, it can be reversed. What would give me a better feeling for that potential would be the bond funds above holding here (ref. NFTRH 745’s view of contrary bullish bond market sentiment).

If we can get the inflation hysterics out of the macro I’d feel better about buying gold stocks, either around current levels (preferable, as we’d originally projected a normal correction which this has been until today) or lower at the support equivalent to HUI’s 200 to 206 area noted in the previous update.

The darn thing is getting oversold now and it could get very oversold if it loses the SMA 200. But either way, a bounce/rally is probably coming. I’d just rather feel good about the macro when it does (which means the bond funds holding and turning up and cost-pushed inflation like that in metals and materials above easing again).

GDX gold stock ETF

More color (or noise, as the case may be) for your consideration.