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Summary of NFTRH 753 and the macro situation leading up to it

summary of NFTRH 753


The noise is rising. It’s rising on Twitter. It’s rising at the gold websites. It’s rising on Main Street. I have an extended family member who wants to sell his lone ounce of gold (given to him as a graduation gift several years ago) because… $2000 and ounce!! It’s price hit 2000!! Here I betray my fundamental views about the dumb metal that does nothing but instead just sits there, inert, while speculative and economic supply/demand dependent assets move about as they will.

I am not telling you not to key in on the price of gold, just as I do not tell family members. People are free to operate how they wish. I am only telling you that I personally do not care what the gold price is doing in and of itself. That is because it is an anchor to value in a system gone (bubbly) mad.

As a gold stock trader or investor I do care what gold is doing, and that is why we look at its relation to various cyclical assets consistently. The gold mining speculation will not work well if their product is not marked up value-wise vs. the components of the “everything bubble”. Regardless of whether or not gold is rising in nominal terms, if it rises in relation to cyclical, bubbled up assets the indication is a counter economic cycle. In the bubble age that is the all too rare situation where the inflation policy shenanigans end and policymakers are precluded from effectively blowing new bubbles.

In my opinion, the situation has been that the confidence bred into the herds over the last couple of decades has been gold’s Achilles heel and has been outright destructive to the gold mining sector, which leverages gold’s standing in the macro both ways. So it really is going to come down to ‘is it different this time?’. Do indicators gone berserk like the broken long-term Treasury bond yield trend (Continuum), the epic ramp (and now rollover) in M2, the Fed’s bloated balance sheet and other extreme indications mean that the bubble is finally over?

If so, we have a strong case for a longer-term bullish phase for the gold mining sector. If not, failure will once again rear its ugly head and send we buggish bulls back to the hole we crawled out of. So my bottom line is that I am only bullish on gold stocks as long as the indicators and fledgling trends say I am. I am never bullish on them because the usual perma-bull suspects think they should be bullish. Let’s look at some of the important indicators.

Charts may not be able to predict the future but they sure do 100% accurately illustrate the past and also advise current trends. The recent past in gold vs. cyclical assets has been constructive at least, and trending bullish at best. The blue moving averages are the 200 day moving averages, or major daily chart trend indicators. Lately gold is pulling back vs. the cyclical stuff and that is completely normal. We are still on the broad rally theme, after all. But a decision point is upcoming. At that decision point a gold mining bull will want to see these trends hold. I have little reason to suspect they won’t.

Gold ratios to cyclical markets

But here is an important point and it’s one that I think screws up more than its share of precious metals investors. It’s twisted thinking, but it is true. Gold stocks often rally best (during the bubble years, mind you) when gold is dropping vs. the likes of oil, copper and commodities in general. That’s the inflation bugs buying it all; gold is silver is tin is copper is hogs is wheat.

But in a post-bubble environment where policymakers are either unwilling or unable to re-pump the deflating souffle’, gold is secure liquidity. If we really are post-bubble, we are in the very early innings. It has barely started. Gold miners have been a leader of the rally that began in Q4, 2022. That will be a vulnerability, initially when the broad bear market resumes, in my opinion. Later, if/when the full on counter-cycle engages quality gold miners bought on downside opportunity could be career makers… again, if the macro is changing for real. That’s an important “if”, folks.

Okay, enough sermonizing from Reverend Gary. Let’s move along.

Inflation Signals?

On Friday it seemed as though the very sector that FOMC used as an excuse (for a coming recession) in the minutes of its last meeting rebelled and went off plan. The Fed wants to deflate this bubble, after all. Probably as gently as possible (“gentle” is not likely in my opinion). But the happy bank headlines appeared to re-stimulate hawkish fears in market participants, or their machines, and thus inflation signals as short through long-term yields rose.

bank sector headlines

Due to the flag-like cluster of monthly candles on the Continuum chart and fading inflation signalling that has persisted in not (yet, at least) failing into a liquidity crisis, I am keeping open to the idea that maybe my “deflation scare” call could be early. I’ve been expecting that sometime in H2, 2023 as you know.

The yield has backed off from 4.4% to 3.5% amid what we’ve labeled a relatively pleasant Goldilocks phase. I very much doubt that Goldie is going to persist and the question is, what is the next move after she passes? Dear departed deflation proponent Robert Prechter once called for rising long-term Treasury yields amid deflation. But the “everything bubble” chewed him up and spat him out long ago. I don’t recall his rationale for it, but it may have been the ole’ repudiation of debt theme amid deflation.

30 year treasury bond yield (continuum)

Regardless of what could drive long-term yields, and possibly inflation signals upward (that is not an operating theme, as NFTRH holds a disinflationary/deflationary view, but I want to keep in touch with probabilities at all times) yield curves will be important in their signaling. With a very firm T-bill yield, and proxy for the Fed Funds rate, the 10yr-3mo. curve is inverting still like nobody’s business. The Fed is in control and tightening.

The 10yr-2yr curve is still well into inversion but has been steepening a bit. From one of Friday’s updates:

On that note, a steepening yield curve could initially be inflationary just as the inflationary steepener in 2020 was initially deflationary.

I realize I am confusing some people right now and frankly, I sure do not have it figured out. But yield curves steepen under inflationary and/or deflationary pressure, with the difference being whether or not nominal yields are rising (inflationary) or falling (deflationary).

As the Macro Relates to Gold Mining

As it stands, this daily view of the 10yr-2yr curve has not even confirmed a steepener yet. In essence, it bounced amid the “banking crisis”. A real steepener driven by deflationary liquidity crises would indicate a positive environment for gold relative to most other assets (that’s an important distinction, because the nominal gold price may not do much amid deflationary pressure) and provide the positive leverage* for a future persistent bull phase in gold mining stocks.

10 year - 2 year yield curve

* Just as decades of bubble making provided negative leverage.

The counter-cyclical sector has rules that are contrary to the thinking of a majority, which makes sense since we’ve literally been bred by 2 decades of bubble-making to think in a certain way. So again, has something changed on the macro that will halt the bubble making? A super important question. If it has changed then slowly but surely the gold mining industry should gain fundamental operational traction as gold rises in relation to mining costs (energy, materials, humans) and in relation to the superstar of the bubble phase (stock market).

We’ll let Bob Hoye dredge the history of the gold mining industry and the great depression. But what we will do is use logic and apply it to current events. A very simple if/then statement:

If mining costs are dropping in relation to the mining product… THEN operational improvement is indicated for gold mining companies that do not suck for other reasons (like greedy management sucking up the fundamental gains, bad luck due to adversarial regional/geographical political backdrop, poor exploration results, poor operations in general, poor acquisition decisions or other reasons that could impair a company as down, dirty and old fashioned as a mining company. I mean, it’s not like these guys are securely guarding Cloud transactions, enabling e-commerce or creating AI robots.

They are digging rocks out of the ground in often adversarial environs. Risk aplenty comes with any given mining operation, obviously. So as a gold mining bull, we are looking for the top-down macro to become a tail wind and then trying to find the best operators to improve risk/reward. The ones I currently hold (portfolio below) are among those I’d want to hold in a real bull market.

US Dollar & Gold/Silver Ratio

The environment is not yet unique for gold mining because like several other markets, the miners are rising against the fading US dollar (and Gold/Silver ratio). This has benefited the broad US/Global stock rally and some inflation trades as well. A primary reason I cannot strongly proclaim a deflationary view yet is illustrated by the daily charts of these two would-be liquidity destroyers. On Friday we had a little rumble of stability in these two as gold and silver got rocked and much of the rest of the macro initially popped and then reversed. At this point let’s consider that in-day noise probably instigated by the banking headlines and machines programmed for ‘Fed hawk’ reaction.

US dollar and gold/silver ratio

The weekly chart is interesting. You may recall that we had been reviewing a potential A-B-C upward correction within a new bear market (A was were B is now shown). But in dropping to the pattern neckline, Uncle Buck has been too weak as my unsophisticated view of this stuff is that B would have begun higher than A. But the recent pullback actually ticked a slight lower low to the February low.

What we can state is that USD is in a bearish pattern and if it loses the neckline there is potential for a large decline to C, ironically within an existing bull market as opposed to a potential new bear market. Such a decline could allow for not only the precious metals complex to continue to rally hard (and likely break gold out to blue sky), but also commodities to take relief rally and the labored stock market rally to finish up as well, fulfilling its would-be mission of sucking ’em all back in.

us dollar and gold/silver ratio

But two things to consider: 1) the buck has not lost the neckline and 2)… it’s in an ongoing bull market from 2008. Here’s the monthly chart. The question is how far can USD sink into the significant layers of support it has established. If the above A-B-C plays out and finds support at 92.50 then there could be a lot of bull going on in the near to intermediate-term before a serious liquidity event comes about.

At this point it is just something we should be aware of. An improbably bullish macro situation that persists with the “death of the dollar” megaphones taking center stage, as they’ve been waiting to do for 20 years.

us dollar and gold/silver ratio monthly chart

The gold miners would very likely be prime participants in such a phase, and there is a potential for upside theatrics in silver, gold and the miners. But this would push out the real, Hoye-esque post-bubble contraction bull possibly into 2024. In other words, if the precious metals spend much of 2023 bulling along with other anti-USD items the next big buy would not be until a subsequent correction across the macro has played out. But bullish is bullish, right? So that 2023 speculation scenario would be as viable for profiting as would be a long bull market in a post-bubble environment. Eh?

The mental gymnastics I’ve put you through above are the product of a very complicated macro situation that I am trying to make sense of and illustrate for you. But my ability to be clear is either helped or hindered by the state of the signals. If by no other vantage point than USD’s nest right at the neckline, the signals are not yet clear. If USD rallies and gold turns up in relation to silver, everybody out of the pool (figuratively, at least). If it breaks down and the ‘C’ plot becomes viable, we’d prepare for an potential and unexpectedly strong rally across assets. That’s all I’ve got, other than companion indicators that we’ll review along the way with USD/GSR, obviously.

Gold Stocks

So what happens when the TA talks himself and his readers into a corner? Why, he retreats to the relatively simple and enjoyable stuff, like the GDX daily chart. GDX gapped up and filled the 36.10 gap on Thursday and then got whacked on Friday. Normal. Now the question is whether it is going to set about the 40.14 gap from a year ago before a meaningful correction (Friday was not that, it was a reaction). Or was Friday’s whack to fill Thursday’s gap the start of something bigger?

As has been the case lately, my view is that either GDX will fill the 40.14 gap before correcting or it will drop to fill the March gap at 27.95 first. Other TAs may draw projections onto their charts of what they think is going to happen. But this TA will simply tell you that GDX is overbought on the daily time frame. Overbought and still bullish. Overbought comes with bullish, but also ends rally legs eventually. If you are day trading, you’ve been taking profits and not caring about whether or not the rally will continue to the upper gap. I am not day trading, but nor am I investing just yet.

What I am doing is looking at the 27.95 gap as an opportunity, either sooner or later, to buy a ‘higher low’ test of the SMA 200. Even that (a higher low) would keep the situation bullish on its larger trend.

GDX gold miners ETF

Speaking of bullish, HUI (weekly) halted at the resistance zone we observed last week. But on the weekly time frame gold stocks are not particularly overbought. What they are, however, is bullish. So keep in mind that a GDX upper gap fill at 40.14 would rhyme with an HUI ping of the upper line of the downtrend channel. It is possible that an overbought index could ping but maintain its downtrend channel and correct harshly to the GDX 27.95 gap (equating to 220-230 support shown here on the HUI weekly) while cyclical markets resume their bear. But that is forward stuff. For now, bullish.

HUI Gold Bugs index, weekly chart


If an anti-USD rally continues in gold stocks and the broader macro with a breakdown in the buck, I would plan add not only to precious metals positions on opportunity (e.g. CEF position increased on Friday), but also quite possibly more commodity/resources positions (e.g. recent adds in USO, MP, AR, URNM, not held with any conviction I might add) and depending on whether or not Goldilocks can persist in such an environment maybe some of the Goldie stuff we’ve focused on since January (FTNT was sold, but I still hold CRWD and a couple Biotech related items).

But we can be on watch for whether or not the broad rally continues and as stated recently, also on watch for a rotation to the more inflation sensitive stuff to possibly lead it to termination sometime by or in H2, ’23. But the main theme is ‘broad bear market’, so I will want to be open to taking short positions as well. Just not yet, not until I see the whites of the bear’s eyes or the frenzied, glazed over greedy look in the bull’s eyes.

The dollar could hold, rally along with Gold/Silver (GSR) and stop the party sooner. It’s week to week because the ideal big macro picture is for the bubbles to end in 2023. Whenever the subsequent rush to liquidity erupts, it would likely pump USD and GSR. While we are operating on theory here, it is after that event that the gold mining sector may rise above all others, fundamentally. But as has often happened in microcosm (ref. Q4, 2008) they get dropped while the fundamentals scream higher in the face of rising USD and GSR. So it is entirely possible we’d get a big buying opportunity while most are running for the exits due to false fundamental assumptions embedded over the years by inflation touts.

Bottom Line

It is still party time now. That includes the gold miners, which are not yet quite unique and potentially commodities, which have barely moved. Party time could end sooner (we have exceeded the originally projected Q4-Q1 time frame, after all) or it could end later (after a drop by USD to point ‘C’), but I think that the real and unique move in gold stocks is out ahead. Possible well out on the horizon. Personally, I’d rather get a GDX gap fill (27.95) sooner rather than later but it is still very possible that a lot of bull can play out first.

Gold and Silver Commitments of Traders (CoT)

Last week we reviewed detailed CoT data showing gold’s situation mediocre at best and silver’s still constructive. Today let’s dial in the view starting from 2019 (when gold’s new bull cycle began with the break above the 1378 “bull gateway”) to today. As you can see, as of April 11th gold was heading toward the high risk area as large Specs (green) rose longer and Commercial hedgers (blue) sank shorter.

It is not necessarily a show stopper and anyone who spins to you the story that commercials are “smart money” and specs are “dumb money” is spinning a tale. Commercials are simply on the other side of the trade. Specs are right for the majority of the trend but will be over-positioned at the end of the trend. Hedgers generally hedge that risk. The trend is fairly well extended but not necessarily over. Especially given a bull market.

Gold commitments of traders
Gold CoT (

Silver has been leading gold and its CoT remains in bounds with specs and commercials not near levels that typically end rallies. Now consider that silver rallies often end in extreme upside theatrics and we can say that by CoT at least, silver still has a tailwind, not a headwind. This is the precious metals leader right now. That seems meaningful.

Silver commitments of Traders
Silver CoT (

Finally for the precious metals, I want to grab a look at Gold vs. global currencies as well. This offers a monetary view of what global citizens are seeing. Gold is bullish in USD terms and so too vs. major global currencies. Much like gold vs. stock markets, this is a macro fundamental view and it is quite positive as the daily chart trends are up vs. all currency paper. People the world over will eventually see that their local paper is having issues in relation to the monetary metal.

Gold vs. global currencies


With the Silver/Gold ratio still in rally mode I have had to stick a fork in my deflation view to see if it is still viable. It is not only viable, but favored. But it could also be pushed out for a while. Silver’s leadership in this “metallic credit spread” implies theoretically positive things for the broad global rally and in particular precious metals and commodity/resources trades. That’s the implication, folks. The reality may turn out different. But I have got to follow and respect the indicators that got us here.

But commodities as a whole have been very weak in the face of the rising SGR. That could be seen as confirmation of the disinflationary/deflationary view. So, please do not interpret any constructive views (fleeting or otherwise) NFTRH may adopt toward commodities or commodity/resources producers as anything more than speculation.

I am admittedly uncomfortable with the OPEC+ price manip that drove oil to break out of its wedge (USO fund, which has reliably tracked WTI oil shown here) but as noted in the trade log, the seasonal average is positive and the CoT data contrary positive. Worth a shot.

crude oil fund, USO

Copper miners are bouncing in relation to gold miners (COPX/GDX) as has been Copper/Gold. The difference is that there is technical evidence that the Copper/Gold ratio has resumed its major downtrend, while COPX/GDX held a higher low to July, 2022. If the macro truly goes counter-cyclical and post-bubble, we’d expect this to eventually break down.

copper miners/gold miners

Copper miners FCX, SCCO, ERO, etc. are all technically bullish, as is COPX. The copper miners are an exception among a mostly still-bearish commodity complex.

Natural Gas: Post-crash, slithering along (at 2.11) above very long-term support (1.90 to 1.70). A long-term Gas bull should be paying close attention as a bottom feeder here, as Natty sports some daily chart positive divergence by RSI and MACD. I added AR as a play on this. But I have trouble looking away from the long-term chart of the commodity itself, as well.

Uranium: I added URNM, but the sector is slithering sideways with a negative bias. Leader CCJ looks better, however, as it slithers sideways with a positive bias. Indeed, I am putting CCJ on watch. Other watch items are NXE, UUUU and the u3o8 price tracker, SRUUF. The uranium case on the long-term appears fundamentally bullish according to knowledgeable sources who study the sector more closely than I do.

Lithium, REE, Palladium, Platinum & Nickel: The ‘battery materials’ play (including Li & Ni) has gotten hammered. Sure, it is viable for the future; even critical. But hype is always punished eventually by economic, sentiment, and/or valuation reality (just look at the Cannabis sector). Li producers ALB and LTHM are technically broken. Can bounce, but broken. Ni is similar, in correction and vital for the future. REE fund REMX is trending down, as is currently held Rare Earths (US) producer MP. Pt continues an attempted trend change to up, while Pd is bouncing within a long downtrend. Watch item SBSW took a big pop and then a harsh drop on Friday. Got to love this mean spirited market.

Agricultural (GKX): The index is bearish and the ETF (DBA) is breaking upward from a basing pattern, as noted last week. Must be in the makeup of the two. For example, Sugar is screaming higher and may be doing the driving on DBA, although I have not verified that. Regardless, though certain Ags are seasonally positive into summer I’ll continue to have little interest for now. Nor in the related watch items, MOS and NTR.


Savings balanced by gold.

Trading Account: no positions

Roth IRA (non-taxable, no contributions)

Cash & equivalents are at 84%. The holdings I do have are weighted toward gold stocks (and the largest holding, the Au & Ag fund, CEF), with a few specs on commodity/resources, Biotech and a remaining Tech holding (CRWD). But it sure is a portfolio that is anticipating the next leg of the stock market bear either sooner or later.

If the bear is to resume sooner (rally is fully intact) we’ll watch for signs and personally, I’d like to poke a few short positions (with cash the main risk manager). That could also mean hedging the gold miners at some point with the likes of DUST. If the rally continues I’d want to evaluate whether it will be the Tech-led Goldilocks type thing we’ve been managing or perhaps could fan out to include commodities. Let’s also watch to see if global, on balance (ACWX) pivots bullish vs. the US (SPY/SPX). We’ll watch USD, among other indications.

roth ira

Cash & income-paying Equivalents are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.

Refer to the Trade Log under the NFTRH Premium menu at for trade info, if interested (not that you necessarily should be). Also, you can follow at Twitter @NFTRHgt for notice of updates.

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