NFTRH+; View of bonds and thus, Fed, gold, miners and silver (key technical levels again reviewed)

The market is tightening credit conditions again. In other words, it is projecting a sill-hawkish Fed. This is where we lay waste to all the hopes, shills and promotions about the Fed imminently cutting rates and gold going “to da moon!”. It won’t help commodities or stock markets either.

2022’s mini bear market was brought on by the hawking Fed and that was not in line with history, as markets generally don’t top out until the Fed is done with a rate hike regimen. But this is just one macro rule among many that have been broken during the current phase and it is somehow related to the broken indicators.

Speaking of which, per NFTRH 753:

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.

Below is the chart today. This thing broke the markets in 2022 as it reacted along with the Fed to the more severe than expected (ha ha ha) results of the Fed’s own inflationary actions in 2020 into 2021.

In a related matter, if real yields do not play ball – and with Fed hawk sentiment in full control the ‘real’ inflation adjusted yield on the 10yr is not falling from the topping cluster we’ve noted in recent reports – it’s not likely to be gold friendly, commodities friendly or stocks friendly.

30 year treasury bond yield

Something has the bond market spooked and I have no idea whether or not it is related to what we speculated about in #753’s executive summary:

As for gold, the expectation has been that it can and probably would test the 1950 area on a reaction from the 3rd high (1st one is not shown on this daily chart, but the red dotted line is the projection from it). A test of 1950 would not only be technically normal, but preferred.

Watch for 1950, then the uptrending SMA 50 (1923) and if things get extreme the ‘higher low’ in the 1820 area. Also of note is the gap in gold at 1872. That could fill and also provide the ‘higher low’, obviously.

gold price

The above would correlate with the preferred buying area for GDX at its ‘higher low’ gap and SMA 200 in the 28 area. From #753:

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.


But why don’t we just hold the short-term negative hysterics until they prove to be in play? Gold has support at 1950 (+/-) and GDX has support at 33.

But the bond market, which is intimately tied to the Fed’s stance at any given time, will be a primary picture to watch going forward. If the wrong signals come up (rising yields, further inverting yield curves, real yields bouncing within the topping cluster, etc.) get ready for the potential of the more extreme precious metals correction targets. If bond signals moderate, well, silver is still in leadership mode and its CoT situation is not terminal.

silver/gold ratio

So, let’s remain measured at least. The reaction/correction was coming, it is here and we should be prepared for it (e.g. traders were advised last week to consider taking profits).

While I decided not to hedge my few gold miner positions, cash is just fine right now pending further evaluation. If the more extreme (and frankly, hoped for) downside ‘higher low’ targets look likely I’ll probably sell a couple more items and wait for the buying opportunity. But first let’s watch the bond market and collect income from cash.