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Precious Metals

Let’s start with the only sector that has been worth its salt (and its gold) lately. As a starter, on Friday we had an extensive NFTRH+ update on the precious metals, mainly focused on gold stocks (HUI) and the possibilities in play for an interim pullback, but also the potential that things could accelerate. The major operating target for HUI has been 500 (+/-) for years now. It could be coming sooner rather than later. The status per that update is still applicable.

Meanwhile, here is a chart of GDX and some of my favored gold miner holdings along with one royalty. Sweet trends all around (aside from NEM, which is something of a turnaround play and looking good in its own right), although the distances from the 50 day averages are getting stretched.

Before continuing, let’s note that the #silversqueezers are at it again. Irrepressible, are those silver bugs.

Make of it what you will. Personally, I don’t like it. Never have. To me it is a dangerous mix of conspiracy theorizing and hype. I guess it’s kind of funny too.

Silver is targeting 42 off of the Cup, the handle breakout and climb above the daily SMA 50 and 200 and its intact uptrend. So if the #silversqueeze squirrels turn out to find their nut this time, the daily chart is willing and able.

On the big picture, let’s recall that the initial target of 35 has long since been registered. But this chart that was last viewed in 2024 showed an alternate target of 42 (how convenient). 35 was based on the large (2020-2024) pattern’s down-sloped neckline. 42 is based on a measurement from the breakout/support area at 30. Captain Obvious calls for 42 as our operating target based on two very different charts concluding the same thing.

Interestingly, while gold is quite overbought (and quite bullish) on its monthly chart, silver is nowhere near that status. If the Squeezers are going to be right, it could be soon. However, the longer silver fails to assume the lead over gold, the more our preferred dis/deflationary interim view stays intact (I have corrosive inflation, i.e. Stagflation, for later, pending an interim market liquidity crisis of some kind).

The first chart in the NFTRH+ update linked above is of the Silver/Gold ratio, trending neutral with a negative bias (positive bias for the deflationary view).

Here is the heretofore leader’s monthly chart. At target, overbought and bullish in a way that an asset that bides its time through so many years of speculative bubble-making would do, when said bubble-making starts to come unwound. In other words, it’s had a lot of pent up energy as it just sat there like a heavy lump of value while speculative frenzies from Bitcoin to AI popped off like bottle rockets.

Our view has been of a new macro. A macro that will not work the way the previous one (roughly 2004-2024, with 2013-2024 being the most intense of the bubble years by policymakers) did. So why not a new status for gold as a reflection of that failing macro?

Regardless of the overbought situation, I view this big upside surge to target (and to a notable round number, 3000) as a launch into this new macro, regardless of any interim corrective reactions to come.

A subscriber sent an email referencing the Macrocosm’s largest planet, Jupiter, along with this article.

Why Has the Price of Gold Risen So Sharply?

While I am not overly on board with some of what is written in the article, I am on board with the “economic uncertainty” input for gold. Jupiter (“Economic deceleration & waning confidence) is the largest planet for a reason. Where once I had to use this pretty picture to debunk the reasons that perma-bugs put forth to keep their herds bullish, in the new macro it serves a much preferred purpose of showing WHY we should be bullish. Oh, and Saturn is really kicking into gear too.

I am a visual learner. I need pictures because my mind wanders when trying to absorb too many words, and too much data. While it is probably a disorienting and/or ugly macro for most people, it is a thing of beauty to me, because I have awaited its coming. Awaited its clearing of the chicanery in play so strongly over the Greenspan > Bernanke > Yellen > Powell continuum of policy gerrymandering (not to mention routine fiscal abuse from both sides of the aisle).

As for Saturn, gold is now outperforming virtually all cyclical markets. The daily chart picture shows only Gold/Copper having difficulty lately. I think copper may have gotten the China bid (while Cu miners have grossly under-performed the metal). But the major trend in Gold/Copper is still up.

As for the king of bubble policy recipients, check out Gold/SPX for a look at what I think is an early sign of a deflating bubble.

Gold has impaled the resistance area to its relationship to the Teflon Don, AKA the S&P 500. Due for a pullback? Maybe. You would think so. A contrary setup is in play. But again… NEW MACRO. I view it as a launch. If we do get a phase where stonks get bid and gold gets sold, it would very likely be a buying opportunity (per this chart, maybe around the upper green line) in gold and a selling/shorting one in stocks.

But I don’t want to speculate on that because I don’t want to be a trader of the new macro. I want to be a rider of it. So personally, if need be I’ll again use the sometimes satisfying, often unsatisfying tool known as nimbly hedging. Your tack may well be different. For example, I think “buy and hold” will work very well in the coming months. Well, we should have long ago bought, but “add the dips” may be a better way to put it. Personally, I want to increase positioning, preferably on opportunity.

Let’s close the segment with the 2001-2004 analog chart, which in theory at least can give validation to the recent weakness in the US dollar along with relative strength in the Gold/Silver ratio (in the old macro, USD and GSR much more often rose, declined or flatlined together).

USD is weakening within its post-2008 bull market. This has been an extended process, whereas in 2001-2002 it topped out and dropped violently.

The HUI/Gold ratio (HGR) has not yet made a move to change its trend as it wallows on the floor. In 2000 into 2001 it bottomed hard and turned up harder. The current phase has been a hard low in 2015 and then years of wallowing and likely, basing. Now add in the component of the extended USD weakening, as opposed to the ‘top and drop’ historical phase noted above.

Now, let me ask you this… do you think that such a long base in HGR and (a still theoretical) potential topping process in USD might precede a perhaps less violent upside in the HGR, but also a perhaps longer lasting upside? Well, first things first. HGR needs to get off the floor. But it’s food for thought.

If the above is anywhere close to a future reality, the HUI target of 500 could be looked back at a few years from now as quite modest, and the bull market could go longer than we might think for gold stocks, which everyone knows are never investments, but trades only. They are probably a trade this time too. But it could be a longer one than even I have expected to this point.

Okay, that’s enough bull hype for now. It’s a thought exercise based on charts, which are little more than historical facts documented.

Bottom Line

The precious metals, especially gold and gold stocks, are benefiting from a new macro alignment with new rules and a counter-cyclical flavor. This is what I’ve been harping would be needed, for years. It is here. Regardless of the inevitable pullbacks and corrections, the sector remains bullish on its larger picture. It is bullish technically, and importantly now, macro-fundamentally.

Onward…

Bond Market and the New Macro

I can think of no better picture for the new macro than the 30yr Treasury yield Continuum, which was busted in 2022. Folks, that is decades of one thing (disinflationary bond market signaling) harshly terminated by another thing (the 2022 surge to break the limiting moving averages).

For the favored interim deflationary view to come to the fore, the yield will likely have to fail the green dotted bull flag. It has declined to test it, but has not broken down.

Dialing in to the daily chart, we have the battle of…

4 waves up, vs…

4 waves down.

Friday’s downturn at theoretical point 4 kept the deflationary view in play. A rise above point 2 would have compromised the view. There is a ‘5’ coming one way or the other. Down would be in line with our favored view. Of course, with Trump throwing monkeys and spanners all around it could be chaotic either way.

As pertains to the stock market, the steepening pressure of yield curves has finally put a crack in the S&P 500, as we knew it would eventually. Yield curves tend to flatten to inversion with an economic boom and steepen and de-invert with an economic bust. Start of a bear market? It could well be, although that would best be technically confirmed by daily/weekly index charts.

As a final note on bonds, I crept a bit further out on the curve, adding the 3-7 year Treasury bond fund IEI to existing 0-3 year holdings. I also added 20+ years, speculating that TLT could be making a base whereby an interim deflationary, risk-off, counter-cyclical situation may drive it to 120 or so before the next big inflation/stagflation phase. It’s a plan, anyway. I am not married to the position by any means, as I have been to short-term T-bonds for quite some time.

US Stock Market

This looks gross. That is the highly technical way of saying that the bear flag broke upward, shook out amateurish bears like myself, failed at resistance and dropped to fill the gap up.

Rather than short it again on Friday, I added to my risk-off income vehicles per the segment above. That is the first step. The second step would be to see if we get a bounce that could be considered for re-shorting. If the failure last week was a good signal, watch for the gap way down at 5371.

Regardless, if a real (unlike 2022) bear market is beginning, there should be plenty of setups and opportunities ahead. For now I am balanced and patient. I am also quite hesitant due to the extremely over-bearish (contrary bullish) sentiment profile, which also begs risk management per the segment above, rather than putting on an ill-fitting bear costume. I will be a better bear when a bear market is confirmed and setups appear within it.

NDX, same situation as SPX. It’s gross. It looks to be targeting support at 18400 or so.

The XLV/SPY ratio (defensive vs. broad) shows a deep drop to what may well have been the speculative top in the broad stock market. That was one heck of a pronounced speculative phase, topping out (ratio bottoming out) right around the time people thought America was “great again”. So many things pivoted after inauguration day.

Recall that back in November after the election result, our plan became a contrary one that would play out bearish against the “America great again” jingle. Well, that is happening now.

Bottom Line

After many months of degrading indications (e.g. VIX divergence, 2yr yield/T-bill divergence, Yield Curve steepening and most recently, Junk bond spreads rising) the stock market has cracked. The intermediate trend (SPX) is down, while the long-term trend will not be broken until the August 5th low of 5119 is taken out. Nimble traders can short and long at will in a market on the move within the major uptrend.

Later, if a real bear market ensues, short setups for longer holds can work for those who can stomach it. Cash is still paying income and short-term Treasury bonds are as well. These are excellent risk management tools, whereas shorting is speculation.

US Stock Market Sentiment

If it was contrary bullish last week, it is more so this week with Smart Money indicators eating the stock market and Dumb ones still wallowing bearish. Short and medium-term risk indications have improved markedly as well. By this measure and those below, US market sentiment continues to be a firmly contrary bullish condition (and a lousy timer).

Investment Managers have tanked their bullishness to 57% from 91% a little over a month ago. This was on Wednesday, 3/26 and the way the week ended you can bet that NAAIM are very bearish (contrary bullish) in real time.

AAII actually ticked a bit more bullish on the 26th, but remain very bearish (contrary bullish).

Fear/Greed index (via cnn.com) is still in the red, at an “Extreme Fear” reading. This week let’s review its 7 components for more detail.

Global Stock Markets

The charts below are still trending bullish and in some cases, buy levels noted. But it is important to keep in mind that if the US markets go bearish for real, it is unlikely that these would continue going up. I make jokes about “America great again” and the contrarian play in the other direction; but there are limits to that.

The world has broken its downtrend vs. the US stock market’s primary index (SPX/SPY). The channel coincides well with the 200 day average and now the ratio is attempting to take out a clear resistance area. This would probably require further weakness in the USD.

This is a prime view of the contrarian plan against the “America great again” hype.

Nominal ACWX has been pulling back, but nowhere near to the degree that US stocks have. Support around 55 is key here, as is the SMA 200 at 54.

China large caps are taking a needed breather. The FXI/SPY ratio is also coming off its overdone upside, as we anticipated it would. I may be interested in re-buying FXI if it comes down to 32 or so.

Japan looks gross. Recall here that Nikkei finally hit upside targets that we had in play for it for years. This looks like a short if I’ve ever seen one. But again, you know me and shorting. Very spotty at it (but I am honest).

Asia (ex-Japan) looks like it is a buy in the 70 to 73 range, assuming it has more future bull to go and does not break the moving average trends by making a lower low to January. Again, a weak USD is probably needed.

EEM similar, in the 41 to 43 range, assuming weak USD and a hold of the uptrend.

Europe STOXX 600 looks precarious for a potential decline to the 520 to 525 area.

UK 100 is a little better, but a technical buy (all other things being equal) would be at the SMA 200 (8342 and trending up), which meet clear lateral support.

Canadian TSX is in a vulnerable looking pattern.

Aussie AORD took a hard drop and found bounce support a hair above the August low. This could be a blueprint for many other indexes, as we have planned for such an event that would not kill the major uptrends, but would sure put a bearish spook in things.

India BSE/Sensex has bounced from the support of the lateral cluster at the left of the chart. A break above the SMA 200 (79204) could send it back on its way.

LatAm 40 appears to be slowly shifting to a downtrend, despite the volatile 2025 uptrend.

Speaking of LatAm, Argentina is interesting because for years its stock market went up with its inflation rate. Here we see the MoM inflation rate declining for a year now and yet the stock market only taking a moderate correction during that year. There could and probably should be another leg down near-term, but overall the continuing uptrend over the last year bodes well for a society trying to get its monetary and fiscal house in order through austerity measures.

Editorial comment of the day: If the US and many other inflated economies would have done the same a couple or few decades ago we too would have a healthier, more equitable economy that was not stacked (by inflation) to make the rich (asset owners) richer and the middle and poor, poorer.

Let’s end with old friend the TSX-V index, he of the important signals for junior mining and speculative commodity and resource plays. As noted in the Daily Notes on Friday, it’s either going prove to be an ill-fated double top or hold the intersection of the rising SMA 50 and lateral support in the 625 area. If it holds its bull stance, the next target is 680.

Bottom Line

The global picture is a real mixed bag. Relatively strong areas continue to be China, Asia and EM with India possibly getting interesting again. A really bad looking chart belongs to Japan (Nikkei) with Canada’s TSX not looking much better. The balance of the world is “anti” the US dollar, favoring its weakness.

Commodities

• CRB, GNX and DBC are all in similar short-term positions, toiling below the 50 day averages and not looking very good. GNX and DBC trend sideways while CRB trends up.
• Crude oil bounced over the last couple of weeks, but remains locked in a downtrend. NatGas made a solid up move at its uptrending 50 day average on Friday. I still hold one of the AR positions for Gas, which has a seasonal upturn into June, a pullback into July and then a resumed upturn into December (on average). Crude’s seasonal turned up in February and runs to October. Maybe the bounce from early March is a delayed start to that trend. Then again, all due caveats about seasonal averages not playing out in any given year. Best to let the commodity do something technical to break its trend, which it has not done yet. XLE started to decline from its recent spike high. So for now, the volatile sideways pattern remains in effect.
• The mystery is why the copper miners doing so poorly in relation to the metal, which ticked an all-time high last week before recoiling. I still hold SCCO, but am going to stop trying to poke copper stocks until I get a better feel for what this chart (COPX/Copper ratio) is going to do:

• The Uranium sector flopped last week and I managed risk by eliminating holdings (URNM & NXE) with no damage, after not taking quick profits. They were not added for the short-term pop that followed my buys. Next time they are added it will probably also be for the bigger picture supply/demand fundamentals. They were bottom feed buys based on no good technicals. Maybe next time.
• Rare Earths plays MP and LYSDY (weekly charts below) are still held. MP has established an uptrend from last summer and is dealing with the next resistance level around 26. This is a strategic US REE producer and processor. It’s a fundamental hold. LYSDY is an Aussie REE play, which broke up from a wedge and has since labored along, fanning its way toward a key resistance point. I do like its weekly RSI and MACD.

• Palladium and Platinum appear to be perma-sideways. But they also could be basing for the next upturn, whenever that may be (and it may be after an anticipated dis/deflationary even plays out).
• As noted, I am not directly interested in the Ags. But a subscriber requested a look at some related “ferts”. So here are weekly charts of IPI, MOS and NTR.

IPI may be completing a base if this little pop above resistance holds and turns to support. Next resistance is noted.

MOS looks less interesting, but could be eyeballing resistance surrounding 31.

NTR took out a wedge and is wallowing below resistance at 58.

Of the three, I like IPI best.

Currencies

All the commentary needed on paper currencies in this new macro is contained in one chart. Gold is firmly trending up in EUR, CAD, AUD, CHF and JPY, along with USD. This is an expression of global lack of confidence in respective monetary regimes. It’s not just the US, now is it?

Portfolio

Gold is long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size. A lot of cash, some equivalents and gold mining (plus MP) the main theme, with some Medical Device, CLOU & ARKK support retests, and a thus far failing stock market bounce spec in AVGO.

Roth IRA (non-taxable, no contributions)

The chart expands to a 3yr view and advises that while near the highs, a sideways consolidation is in progress. Flatlining is primarily due to my poking at broader market items that are thus far falling knives. These include Tech and some commodity/resources items. Gold miners? I am in ’em for a longer haul, baby.

Cash and equivalents are at 81%. EUO and possibly TLT may also act as risk management shock absorbers. To illustrate how I just don’t even look at certain items, future Nickel play TLOFF (TLO.TO) exploded upward last week and I did not know it until I looked this morning and wondered why the position was only down 7.3%. A good example of how drill results, buyouts or other events can drive these things out of nowhere. Talking to you, AMEGF (AE.V). ;-)

Aside from MAIFF (MAI.V) with its permit questions ongoing, I can’t see a single gold stock in these holdings that I don’t want to keep holding. And as noted previously, I’d like to hold MAI because news could drive it hard. Maybe NEM can be traded, but only because I have a position in the other portfolio.

Obviously, anything can be sold for any reason, if said reasons develop. I just don’t see them at this time. I would appreciate a gold stock buying opportunity to the downside. But as noted above, while the sector is getting overbought, a “launch to blowoff” dynamics is potentially in play as well.

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 nftrh.com for trade info, if interested (not that you necessarily should be). Also, you can follow on X @NFTRHgt for notice of updates.

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Notes From the Rabbit Hole (NFTRH) is a weekly market report in which we provide analysis on financial markets.  We make every effort to provide accurate and high quality content, but this analysis ultimately represents our opinions and these opinions are provided without warranty or guarantee of any kind.  See full terms & conditions of service under the ‘About’ heading in the main menu.