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Bananas

While the little guy was doing that most American of things on Saturday…

The big guy festooned Washington in a celebration of the military in a way eerily similar to how other strong men around the world like to do it. Dear Leader in North Korea comes to mind.

“We have the greatest missiles in the world. We have the greatest submarines in the world. We have the greatest army tanks in the world. We have the greatest weapons in the world,” Trump told NBC News’ Kristen Welker.

“And we’re going to celebrate it.”

When you think about the countries and regimes that put on such events, well, the average American probably never anticipated being lumped in with that group. At best, it’s tacky and I suspect the average soldier does not love parading around like that. At worst, it’s another sign that the USA has been knocked down a peg.

As a kid I used to love going to Hanscom Field (Now Hanscom AF Base) in Bedford, MA, to see the Blue Angels and other air shows. It was elegant and awesome seeing those fighters up there doing their thing. But heavy military hardware in DC is something different. A show of armor, strength. Made for TeeVee.

Our military is a quietly and historically proud institution. Having to put on a show in this noisy, Super Bowl-like event just seems out of character to how I view the military. Maybe I am out of touch, but I think that the most powerful military in the world should keep a low profile, carry a big stick, and not be the source of a $45 million price tag to put on a show.

In this context it’s not surprising that so many charts we review show the contrary situation of rising global markets in relation to US markets. Or if you will, declines in charts like SPX in relation to the world (e.g. SPX/ACWX ratio, SPX/China large caps, SPX/Europe, etc.), literally since inauguration day.

Is the chart trying to bottom and bounce? Maybe. But the point is already made.

Monetarily, consider the fact that Trump is badgering the Fed to cut rates by a full percentage point, in essence demanding inflation. You’ve got the makings of a Banana Republic right there. Continually rising debt loads and world’s proudest military parading around the capital. It’s off. It’s just not America.

A Balancing Act

As you know, the target for HUI is within hailing distance. But I am being patient. In noting that gold stocks have tended to be “anti” the broad stock market a fair amount of the time in 2025, I decided to end the week trying to use that balance to positive effect. It has worked previously, and maybe it will work now, in the near-term. Broad positions and gold stock positions.

What I mean is that the dynamic that pulled broad stocks back on Friday and bulled gold stocks may provide a natural balancing effect within the portfolios. Shorting just seems like a mug’s game right now, and you know I want setups in order to short. Those do not exist in gold stocks and the stock market got driven down on emotion. I don’t want to short that.

So I have decided to just manage risk with cash (as usual) and a theoretical “stocks down, miners up, miners down, stocks up” seesaw for now. This as risk rises in gold stocks but my gut says ‘not done yet’.

Long-term View of Gold [Precious Metals]

[edit] This email served as a jumping off point to a larger discussion of the precious metals complex, and it morphed into the entire Precious Metals segment.

Subscriber JK sent a request to review my long-term view of gold:

Seeing you call the top here, are you saying this could be a long term
top in gold or are you just expecting a large or long correction?
Trying to make sense of things since it appears the de-dollarization
theme is continuing.

If you could write a couple lines on that in your newsletter this
weekend I would greatly appreciate it, since these are fast moving
times.

Thank you and have a great weekend!

I am not calling a top. I am noting an extended technical situation above a target I’ve had in view for 5 years.

I am long-term bullish on gold’s price, sure. But I don’t care so much about its price. I care about its value, which for 23 years now has been just fine for me, providing insurance and a sense of being grounded amid the lunacy of the debt paper system. I feel the same way about it now at 3400 as I did when gold was in its bear market (below the “bull gateway” of 1378). Value.

I don’t think there is a long-term top in gold until there is a long-term bottom in the system as it exists today. And with a president demanding the Fed spray more inflation onto the economy (big rate cuts or “rocket fuel” as the real estate developer come president of the USA calls it) we are nowhere near having learned even the first lesson about the faults of a debt (at all costs) for growth economy. We have barely even begun the journey to the bottom.

Gold’s price is just an inverse marker of what is wrong about the system. More than that, its price is a marker for when a critical mass of people start to catch on and lose CONfidence in our political and monetary leaders.

Gold is the investment; the investment in stability and maybe a future, more sound system. Gold stocks are the speculation on this investment. If I am calling a top lately, it is not in gold. It is in the HUI Gold Bugs index, because another target I’ve had for years is at hand. So I either have to revise my target or keep it. I’m keeping it. I worked long and hard trying to guide us to where we are now.

Back on gold, I am long-term bullish on this investment, including price-wise. I find this chart to be… epic in its messaging.

As for a gold stock correction, I think that whenever the next real one hits it will have some strength to it. Enough so that I would not want to ride it with too many positions. But if a correction were to start any time soon, it would come with still well intact gold mining macro-fundamentals.

These downtrends represent uptrends in the funda of the counter-cyclical gold mining sector.

When the next real correction comes, and if it is against the fundamentals remaining as they are or improving further, it will be a buying opportunity. So I am not long-term bearish on the speculation either. But here is one macro consideration that could come concurrent with a correction.

If Trump were to get his way on rates, the chart says it would be bullish for gold stocks. But this week’s FOMC is forecast at “no cut” by nearly 100% of CME traders. July is forecast at 77% “no cut”. Only in September do the forces of “rate cut” take over.

Indeed, the graph below shows another vulnerability for gold’s price, as the “real” 10yr yield has sprung back to positive territory. That is not necessarily a picture of a tight Fed, but it is one of the bond market being tight and by extension, influencing the Fed.

Looking further ahead, what if we finally get that liquidity crisis? Do you think the average gold bug is going to say “buh ba… BUT the fundamentals are good!” (as the funda are likely to be)? No, the average gold bug is an inflation bug and will most likely sell such an event (ref. Q4, 2008 and Q1, 2020 crashes amid rocketing fundamentals) because “NO INFLATION!”. Happens every time. The real buy opportunities come amid disinflation or deflationary scares while the inflationists are in hiding.

Meanwhile, the gold mining sector is steaming upward, leading the market and of late, featuring silver leadership. I know some readers could take this the wrong way, but I gotta say it. Within the bug community, the silver ones could be viewed as the dumb money. Not dumb people, necessarily. But a dumb money indication. A naive money indication. My opinion, anyway.

So how about this? Silver is firm lately. Commodities have firmed as well, and as projected. So too some inflation anxieties? The kind that can keep the Fed stern on policy? The very existence of the silver/commodity rally that we anticipated and now manage, could be the ending stage for this leg of the precious metals bull, and likely other markets as well. However…

This paragraph is highlighted because it describes two very different possibilities: The 2005-2008 phase saw 210% upside before poor fundamentals finally cured the situation with the crash of Q4, 2008. A similar situation is less favored right now, but it could happen again. Another reason to keep an eye on silver’s would-be leadership and the commodity trades. In short, I favor a correction in gold stocks from target (+/-), but continued good macro funda. But if the Silver-led commodity trades accelerate we’d make good money now, but likely wave bye bye to the favorable gold mining macro.

Silver leadership tends to be a latter stage signal in the precious metals. The burst upward in the Silver/Gold ratio started the clock ticking on our upside targeting for the entire PM complex. I am not making anything up here to suit my opinions. I have been consistent with this view. When silver finally spikes in relation to gold we’ll have a timing signal (assuming the SGR’s downtrend remains intact). Alternately, if silver changes trend vs. gold we’ll be dealing with a whole other (inflationary) animal.

Option 1 is favored. But option 2 is possible and would likely provide continuing profits in a wider range of trades.

Meanwhile, the HUI/Gold and HUI/SPX continue to show a positive situation for gold stocks. This keeps me in the game to this point. HUI is leading gold, and the stock market as well. HUI/Gold is a positive internal indication and HUI/SPX is as well (along with being a pretty handy picture of the “balance” discussed in the opening segment).

Another internal is not so friendly. It is flat out bullish, but unfriendly from a contrarian perspective. The signal can persist (note how long Frothy #1 lasted), but we should realize that gold miners are no longer hated. They are loved, to the tune of aggressive buying that keeps the BPGDM in frothy territory. As a reminder, this is not a sentiment indicator so much as a momentum indicator of the percentage of gold miners on P&F chart “buy” signals.

Bottom Line

• Gold target was 3000+. The gold price is pushing the limits to the upside. Gold is fine, as it was at $1100/oz. It is insurance, and an investment in very long-term sound positioning and risk management.
• Silver’s target is 40. It’s a speculation (IMO) and in its recent jerk upward vs. gold, a late stage PM rally signaler.
• HUI target is 500 (+/-). The target was established years ago. It is possible that the target could be approached (actually is being approached already, within 16%) while the Fed holds firm on rates and silver makes its blow off high sooner or later (nominally and in leadership to gold).
• The Silver/Gold ratio view was developed for two main reasons: 1) to potentially time the PM rally, and 2) to profit on wider speculations. The profits have come, and the top for gold stocks has yet to come.
• A key will be, surprise surprise, the Silver/Gold ratio. Spike but hold its downtrend and we will be guarded. Persist long enough to change the trend and the view will change to a longer speculation, especially in commodity-related items.
• At this time, a limit to the upside on the SGR is still favored.
• There are other indications of rising risk, and not just by overbought charts. If the Fed keeps its hawk (ish) costume on indefinitely and silver finishes its spike vs. gold, risk may be realized.
• Long-term, gold should continue to reflect how bad things actually are in the surface-level world of debt-for-growth. Silver will be silver, currently bouncing within a 14 year downtrend vs. gold.
• A morph to a longer commodity trade and a new uptrend in the SGR would bring the less favored, but likely more near-term profitable, option forward.
• While stressing that we have not even hit our upside target for HUI, a look-ahead, assuming our projections continue to work, could see said buying opportunity on a decline to the old ‘375’ marker. I’ve added another clear support zone around 320. 500 to 320? That would be an appreciable correction and buy opp. *

* Please folks, don’t take too close to heart a projection on top of a projection, which is what a correction buy target would be when the first projection (500 target) is not even in the books. Just riffing about possibilities for the future.

US Stock Market

If not for the war headlines, I’d have given more weight to SPX’s slight break above and failure back below resistance. This could unfold into a classic double top, but the war drums give me pause on that from a contrarian perspective.

It’s a similar situation with NDX. Boy, this would look like a shorting opportunity if not for the war drums. Meanwhile, playing it by technicals only, both of these indexes appear highly capable of dropping to test the 200 day averages and/or filling some gaps. Both indexes are in “double top potential” mode.

Meanwhile, it will pay to watch the former leader of the US stock market, the Semiconductor sector. SOX has busted back upward to test its pre-crash highs. It too has left gaps to fill one day. But it also has that upside gap down from July, 2024. The view, before the war drums began, was that SOX could fill its gap while SPX and NDX tick new highs. A big time suck [back] in. Key support for SOX is at and just above the 200 day average.

The SOX > NDX > SPX leadership chain is up to something. SOX has broken its intermediate downtrends vs. its broader bros, and Tech is at least positively biased vs. the broader SPX.

Negative internal signaling by this indicator well preceded the H1, 2025 market mini-crash. It can work to positive effect too, with time. Let’s keep a good eye on these ratios going forward. It’ll be important. Extended Semi leadership could lead to the new highs projection we’ve allowed for. Right now it’s just a hint.

US Stock Market Sentiment

The Greed-O-Meter hung in there at Greedy.

It’s a good time to again review its components with the understanding that most of these items will probably not react (start to show fear) until after the selling starts. But they are good indicators of risk.

Smart & Dumb money show an unhealthy picture, contrary-wise. Risk in the short-term got pushed back by the war drums on Friday. Medium-term, it’s still the same risky stock market.

AAII inched more bullish last week, prior to the Friday war drums. NAAIM remained over-bullish (but not extreme). The situation is largely as it has been. Over-bullish but not yet extreme to “bull killer” levels. Gold bumped riskier on the war situation.

Global Stock Markets

As noted at the open, the World has been strong relative to the US ever since America got “great again”. I make fun of that jingle, but it really is pretty interesting how this contrarian projection actually worked out. Back in 2024 such a contrarian outcome was mentioned in these pages as being possible, if not probable. Either way, it was anticipated.

Nominal ACWX looks like it could use a test of clear support at the SMA 50. But again, the war drums are in the mix, making the markets emotional.

Let’s update the TSX-V before proceeding to commodities. It has gapped its way up, leading silver and the recently emerged anti-USD, pro-inflation “Silver/Gold Ratio trades”.

If things get more hysterical (watch the Silver/Gold ratio for potential of a resumed spike) Da ‘V’ is looking up at the 800+ area.

Let’s not get greedy. I don’t think 850+ is coming any time soon. But this index, subject to rebalancing and replacement of components affecting its utility as an indicator, is a million miles below its all-time highs. However, note monthly RSI rising toward previous limits. Let’s just manage 800-850 for now, eh?

Commodities

TSX-V above continues to indicate tailwinds for commodities. So too would the Silver/Gold ratio if it gets a second wind. Typically the SGR has at least 2 surges when it gets a move on. This happened in 2016 (launch, pullback, launch to termination), 2020 (5 waves up out of the crash), 2022 & 2023 (5 waves up each). Last week only saw an initial launch.

However, it did eat up enough upside to put caution in the picture on Monday and Tuesday. The Iran bombing perhaps helped the SGR complete or nearly complete its corrective business.

So pending that, the commodity trades are still alive, Whack-a-Mole style.

Uranium pops, Platinum pops, drops, Copper pops, drops. Oil… ha ha ha, oil! Pops, war drum style. Regardless, of the rotational nature of commodity rallies, the ingredients for its continuation remain in play as long as items like the TSX-V and the Silver/Gold ratio remain intact to their rallies. Meanwhile, have at your favored commodity items, both specialty (e.g. u3o8, REE, PGM) and standard (e.g. oil, copper), as you will.

Portfolio

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

Taxable Account

In order of position size. I will gear further in if the Silver/Gold ratio has another leg up in it. I have preserved my favored gold stocks and am pleased to see what AMEGF (AE.V) is doing in anticipation of coming drilling results. Of course it’s a hole driller, so caveat. Depending on SOX leadership, I may add a bull stock or two as well.

Trading Account

No positions. This is where I’d like to nimbly short individual equities when I start to feel the broad rally is concluding. If the Silver/Gold ratio plays out to the upside, I may trade long in commodity related equities.

Roth IRA (non-taxable, no contributions)

The chart is expanded to the 3 year view this week to make a point that the robo-uptrend is over, the sideways consolidation is over, and now a breakaway and likely ending move is in play. Often, the most gains are made in ending moves because that is when the dumbest FOMOs will tend to jump in. Precious metals, stonks, and now commodities too.

I’ll want to slither more “in” if that appears to be the outcome. But I want to walk a fine line of seeing how far this ending move can go north while trying to complete a neat trick of not staying too long. It’s harder than it sounds.

What this means is that I will plan to continue balancing/rebalancing, profit-taking/re-seeding and being aware of the markets’ internal rotations in the near-term. Balance has worked well to this point. But at some point the music is going to stop (for a while, at least).

Cash & income-generating 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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