Precious Metals – Gold
An excerpt from the Precious Metals segment of the August 24th edition of Notes From the Rabbit Hole (NFTRH 877) focused on gold, which followed discussion/analysis of the U.S. Economy and stock market, and preceded deeper precious metals analysis about silver and gold stocks. Not to mention commodities along with more discussion of stock market strategy.
Also reference last week’s article Gold Is Revolution, which illustrates my most closely held views about the monetary relic.
Happy days [in the broad markets and economy] are very likely not here again. A stock market rally that is running on emotion is here. I am going to trot this chart out again, because in concert with the chart above [not included in this excerpted segment] and several others (including steepening yield curves), the message is contrary to a “happy days” message. Quite so.
If you’ve known me over the years, you know I’ve never held back on criticism of the gold cult community. Always sloganeering, imploring, lecturing and cheering the unwashed masses for their ignorance about monetary fidelity, purity, righteousness.
As you know from some of my more opinionated writing, I too have the view that the system is corrupt, morally if not functionally bankrupt and just plain unjust to a majority.
But we are managing markets, not ideals. When managing markets we have to do what the market’s signals instruct. So for the majority of the 2012-2022 decade I had to tune out gold bug idealism and write about things I did not want to write about. Things like the ongoing policy bubble and its inflationary operations, which supported stocks over gold.
So of course I snapped to attention in 2022 when the long-term (down/disinflationary) trend in Treasury bond yields broke and busted upward. Something had changed. One important thing that changed was that stocks made a top in relation to gold per the SPX/Gold chart above. Today, that chart shows a recovery in progress to correct the overdone fear in stocks and froth in gold from last spring. But that is all it is in my opinion; a correction. A last chance of sorts to adjust one’s view from pro-stocks to pro-gold.
The point is, I am someone who is not shy about calling what I see and keeping my (in this case pro-gold) bias under wraps when appropriate. But in this new macro I am able to call what I have wanted to call all along, a new phase in the gold market vs. the stock market. I believe I have earned a credential of trustworthiness because I did not perma-call gold-bullish through a decade of futility. I think that legitimizes my opinions when those opinions are bullish. Eh?
Moving on, gold’s daily chart has long since bled out its springtime over-bullishness with a long consolidation, which is taking the form of a triangle that can be read as either Symmetrical or Ascending. Both are usually perceived by TAs as continuation patterns and the odds are, considering it’s a bull market, on continuation upward. Formerly overbought RSI and MACD have been completely reset. 3450 looks like the key point to a successful breakout.
NFTRH 877 went on to discuss silver and gold stocks in detail before #877’s concluding segments.
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