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[edit] It occurs to me that I did not begin the stroll down memory lane at the beginning. The actual beginning was my folly as an investor in 1999 or so, thinking that Tech infrastructure areas like Optical Networking and certain picks & shovels software advances like XML would shield me from the bubble, which I did have a vague idea would burst. It didn’t and it did. Also, my beginnings as a gold bug were around 2001 and my first purchase of heavy metallic insurance was in 2002. That worked a little better. ;-)

We Are On Plan

I look at markets in stages and phases. Not as a long-termer (stocks for the long run) or a short-termer (day trader, scalper, playah). I manage macro phases. I want to have a clear narrative about what the market is doing at any given time within any given months-long, or even years-long phase.

A little stroll down memory lane, up to the current day:

• 2003: The stock market bear was showing signs of ending with divergences and indications. I got the indications to stop being bearish. I didn’t want to have to do that, but it became obvious that the market had bullish ideas, compliments of Greenspan’s inflationary policies (as the credit bubble began to blow).
• 2007: Gold stock macro fundamentals had degraded so badly throughout the latter part of the inflation-induced credit bubble that being long the miners was tricky business, and TA was the only tool I used, because the sector was also in a bubble due to valuation per degrading fundamentals.
• 2008: NFTRH was born, right into the teeth of the Armageddon ’08 crash, on September 28th of that year, and we viewed the crash as justified due to the excesses built up from 2004-2008. We also noted that gold bugs were liquidating (it was an unwinding bubble, after all) amid skyrocketing macro and sector fundamentals as the stock market also crashed and gold’s ratios to commodities – and in particular, mining cost input crude oil – rammed upward.
• After buying gold stocks with both hands (I have the scars from catching those falling knives to prove it) in Q4, 2008 it became time to manage a new phase as the bear/crash phase ended. This later included commodities and stocks as it became clear that Bernanke was readying and then deploying the monetary fire hose. Inflation, baby.
• 2011: Of course, as we know, inflation, when it is manufactured to temporarily benefit economic appearances (and the stock market), is no good for gold or gold stocks. Boom! Bear market, beginning in 2011. We managed that bear market well beyond the technical beginning of the current bull market in 2016. That was because there was no bull market signal until a higher low (HUI) was made and confirmed in 2018. Then further confirmation came with 2020’s higher high.
• 2013: The first sentence in the paragraph above notes that the inflationary operations of the Fed (create the money, monetary) and government (spend the money, fiscally) did benefit the stock market. For example, in January of 2013, we were compelled to be bullish on the Semiconductor industry due to its then-ramping book-to-bull ratio (b2b no longer published). We projected a rebound in manufacturing, jobs and the economy based on the leading Semi sector’s internals.
• 2014: This was just before the US dollar began its massive rally in 2014. Precious metals and commodities went to Palookaville and the venerable US stock market was “king of the world!” (conjures the kid in Titanic). Literally, as the strong dollar impaired global stocks in relation to US stocks.
• 2020: Fast forward to Q1, 2020 when we ID’d the new inflationary operation as it was being birthed. My advice then was to stop being bearish because they were printing a new bull phase. Gold/miners led the way up and soon moderated, as the rest of the bull band started to play.
• 2021: Then came the post-H1, 2020 phase, where we interpreted that gold needed to consolidate (a Handle for its massive and bullish Cup pattern) and so did gold stocks, as the inflation problem started to grip in 2021. Gold and especially the miners declined as the inflationary operations of Fed and government in H1, 2020 birthed a cyclical inflation phase that at first appeared a success, but…
• 2022: Quickly morphed into a problem. Despite Yellen and “too late” Powell’s repeated “transitory inflation” bullshit, we knew that “too late” was indeed too late. In 2022 he finally began fighting the inflation the Fed was primary in creating. Gold continued to consolidate and HUI took another down leg in its painful, grinding bull market. Importantly, Treasury bond yields broke a decades-long downtrend as the “Continuum” (chart below) was broken, and this called us to attention to interpret its implications in the years to come.
• 2022: The stock market took what many called a bear market but we, due to bond market dynamics not consistent with bear markets, called it what it actually was, a correction.
• 2023: The stock market celebrated as bond market dynamics (yield curves flattening to inversion) were in “boom” mode. This was the beginning of the fade in macro inflation signals. Commodities dropped and then began a long consolidation that is in force to this day. But it was also at this time that the 2yr yield began to diverge from the Fed Funds proxy T-bill yield (chart below), an indication that preceded major bear markets in 2001 and 2008.
• It was also in 2023 that yield curves began to steepen, implying a future concern (an economic bust comes with a steepening and de-inversion, not an inversion that the media wrongly touted in 2022 and 2023).
• It was only when the curves (esp. the 10yr-2yr) began to steepen that we could begin anticipating changes. And it is no coincidence that the curve began steepening just after the 30yr Treasury yield Continuum broke its decades-long downtrend. Now add in the 2yr/T-bill divergence among other economic signals and you’ve got a bear case. These things fit together, play in concert.
• 2019: Backtracking again, gold had cracked the code (the 1378 “bull gateway” in 2019) and that was the year the gold miners began their next leg up to fully confirm a bull market (painful and volatile though it was). After the 2020 upward explosion the next and gruesome leg down in the then painful gold stock bull market began.
• 2022: The gold stock corrective leg from the 2020 high ended at another higher low, and the current bull phase began as a grind. But begin it did.
• 2024: We more confidently loaded the HUI target of 500 (+/-) and also more confidently projected a weakening economy, subject to Biden, Yellen, Powell and whoever else had a hand in the pre-election fiscal shenanigans that kept the economy in good enough condition for “expert” economists to believe it was real.
• Expert economists look at standard data. We, on the other hand, look at internal market indications. We anticipate. They tell you what is happening in real time. Not convenient for market management. Projections based on indications is needed. Not predictions, but probabilities.
• 2025: The macro indications from 2022 to the current day have been led us to be properly positioned for what is happening today. Per the charts below (as referenced above).

First off, with respect to much of what is written above, here is my second favorite, second most elegant picture of the last few years. We all know I am absolutely obsessed with the Continuum, don’t we? :-)

HUI sliced through the operating target, as the (+/-) is now +37. We have had a lot of words about strategy (trader/investor/hybrid), probabilities of correction and whatnot. But here let’s simply note an overbought sector in a real bull market, bulling for the right fundamental reasons.

We have a bearish group of signals for the economy and by extension the stock market, which is expected to drop hard as adjusted by gold, even if it goes nowhere, 1970s style, nominally.

The 10-2yr yield curve is steepening, which would normally pressure stocks into a bear market or a bear phase. It has not happened yet. I think it’s coming. The 10yr-3mo in the bottom panel has not seemed to fully believe that the Fed is going to cut rates aggressively. Indeed, it tends to wait until the Fed actually takes action. It’s very likely coming. That would raise the 10yr-3mo in unison with the 10-2. This is also likely due to the trade/tariff/mayhem noise in macro, keeping our eggheaded friends at the Fed stuck in neutral. Trump is right about one thing:

I keep giving the stock market a 1970s benefit of doubt, where it could go nowhere nominally while gold rises orders of magnitude in relation. However, bearish is bearish, even if not nominally. It would be a bear market in “real”, gold adjusted terms. But what if that benefit of doubt is not the play and the stock market doesn’t go “nowhere”?

This chart advises that a fall from a market top much more massive than the previous two occasions with a 2yr/T-bill divergence, could be cataclysmic. I don’t tend to use words like that in my analysis, because they are emotional. But I do tend to try to illustrate everything I see as a possibility. This chart tells me I see that. But again, we’ll also give weight to the 1970s playbook that sees a stealth bear in gold terms, if not nominal.

Bottom Line

We are on plan. A bull market in gold and gold stocks, which are rightly leveraging gold’s relative standing in the macro. It’s all I’d asked for in order to get bullish during those many years in the wilderness.

The stock market is also on plan (bearish), except that it doesn’t know it yet. Indeed, it could continue not to know it on the surface if it uses the 1970s ‘go nowhere’ playbook, nominally. But it is very likely to decline heavily in gold terms.

Through years of analytical drudgery, we managed a distasteful macro. But squarely manage it we did. Taking its signals and accepting them. That is still what we are doing, except that now it is to much more pleasing ends because something in the rigging of the system broke in 2022 and they are not going to be able to put the genie (or in the case of conventional stock bulls and economists, benevolent monetary fairies and their fairy dust) back in the bottle.

It’s a new macro, as I’ve been saying since the Continuum broke in 2022. And now its parameters and definitions are becoming clearer all the time. It’s making sense and the indicators are playing in tune.

The Continuum broke, changing the macro.

Meanwhile, an interim disinflationary play counter to that inflationary break is now indicated as the yield above looks to decline for a while and short-term bonds continue to guide the long bond upward. Again, on an interim basis.

Above we can see both a shorter phase and a longer phase as I noted in the opening. The shorter phase we are managing is the interim disinflation/deflationary phase. The longer phase is the new macro, with its inflationary bond market signaling. In the next segment we’ll discuss the best allocations per the plan we are currently managing, the interim one.

Strategy

I am long cash, short-term and longer-term Treasury bonds. All paying nice, comfy income. Cash is due to have its income reduced soon when the Fed flips, likely this month. So I’ve been transferring cash to short-term Treasury bonds over the last few months. I’ve also added 7-10 and 3-7 year Treasury bond funds. This is for the interim phase only, before the next big inflation problem.

I am playing around with the stock market. I was trained by many years of having to put my inner gold bug in mothballs to have an appreciation for certain stocks and sectors as they rotate in and out of favor. I have had a several sexy ones, since sold (still holding a bit of ALAB), but am trying to be aware of the market’s internal rotations as risk creeps ‘off’.

Theoretically at least, this would be seen in internal indications like the XLV/SPY ratio. The daily chart is at least constructive to change to a risk-off trend. RSI and MACD for the ratio seem to be guiding it that way. Hence, I hold items like medical device play MDT along with Bio/Pharma, GILD & PFE. All of these items are held pending their charts holding up, BTW.

Internal market rotation prior to a top and an obvious bear market is a thing. Here is the big picture of what has happened when XLV/SPY actually does gain an uptrend. Bear markets (2001 & 2008) or bear phases (2022). The 2011 to 2016 years were an exception, that did not bring on a bear market, and you will recall that it was also a politically charged time with the Affordable Care Act and other healthcare issues front and center. But 3 out of 4 ain’t bad odds. 4 out of 5 if you want to include 2020.

I’ll remain open to shifting further toward healthcare. But that is risk too. When bonds are generating price appreciation and income, it helps keep me from getting grabby about any stocks in such a high risk macro.

Let’s check in on the stock market’s leadership chain, SOX > NDX > SPX. It’s intact. Especially NDX/SPX, the traditional leader. Semi came into play about 15 years ago as it became more pervasively involved in everything from medical devices to war machines to autos to household appliances to those little mosquito sized drones the government flies into your skin to implant tiny tracking devices. *

* Ha ha ha, but the other guitar player in my old band actually believed it. It was during the Obama years, and I was in a band with 3 Trump voters, so… Crazy aside, he was a great git fiddler, if a little too focused on lead playing. I learned a lot about fiddling from that lunatic, as I had to step up and play with a real player rather than just bash chords, Ramones style.

I distracted myself with the Semiconductor mosquito story, but the point is that I think a return to focus on the more traditional NDX/SPX ratio is a good idea, as Semi gets Trump noise, Nvidia noise, Intel/government noise and so on. NDX/SPX is still going sideways with a slightly positive bias. Unless it breaks down, the internal signal is not bearish for the broader U.S. market.

“A combo of XLV/SPY up and NDX/SPX down would be bearish.” – Captain Obvious

More Internals

Let’s take a look at some macro internals other than those shown in the opening segment. It was with some trepidation that I took my profits on the UVXY (VIX proxy). Then? Not so much. Had I held it, it would have been the same old, same old when you’re actively bearish the market. VIX went right back to sleep. Profit was kept.

As it was I clipped very small losses on SPY and QQQ shorts and a less small but still small (and very annoying one) on Homebuilder ETF, ITB. The Homies got the ‘Dovish Fed, declining interest rates!!! Rah rah rah!” bid. I’ll consider shorting individual Homies later.

A companion to the VIX that I use is High Yield Spreads (junk bonds vs. quality bonds). Here too the message is one of calm complacency. Little casino patrons ensconced in the secure thoughts of a Fed about to go dovish (beneficial to asset markets) and a president who has already unleashed fiscal policy that will be beneficial to the economy and asset markets.

What could go wrong?

Here’s what could go wrong. We are talking “interim” here. Interim bear. Interim recession with disinflationary winds blowing. The setup is already in play with the stock market at nosebleed highs with complacency and positive reinforcement from supposed “experts” like your average egghead, err, I mean economist.

Our original plan from the election was that a big pile of excrement was going to be dropped in Trump’s lap, courtesy of the 2024 fiscal pumping, pre-election. While the BBB legislation is very friendly to corporations and the asset owner classes, we are talking “interim” unwind here. Still on that plan.

The setup is in play with the big picture internals, especially in Bond yield dynamics like steepening curves, the 2yr/T-bill divergence and even the rise in nominal Treasury bonds (traditional safe havens). Let us not even discuss gold flying around at 3586/oz.

Yet “players are nice and comfy” say the VIX and Junk spreads. We will use these two in conjunction as a trigger to the bigger more plodding pictures, which are and have been indicating bearish, counter-cyclical. This can cause short-term whiplash, as the VIX pop and drop last week showed. But when they move together for real, we will have a bearish macro activating.

Precious Metals

Well, this should be a short segment as last week the two most recent NFTRH+ updates were focused on gold stocks, and over the last couple weeks we had a ton of public articles (and a video) on gold, gold stocks and the junior mining space, to boot.

As per the in-week notes, I did some moderate profit taking, but also some re-planting. Notably, skimming some NGD, which had grown larger than everybody else, and re-buying one of two DC positions after it dropped handily the next day. In short, I am trying to stay balanced while not trading myself out of a bull market. As also noted on Thursday:

I could well be wrong, given the extreme overbought situation. But I don’t sense that this is THE end of the gold stock rally.

Then on Friday, voila. Sector up again. Old Turkey (“it’s a bull market, you know”) has a place in my head.

But I do see a lot of energy upcoming in the markets. The lousy jobs report on Friday was an appetizer, but the main course may be when the Fed cuts .25% (per 89% of CME traders) on September 17th. 100% of CME see a cut, with the other 11% now expecting a .5% cut.

There is a thing in markets called “sell the news” (after anticipating it). Could that happen across the broad market, post-Fed or in Q4? I think it could.

Here is the thing. This is all according to our favored and real fundamentals. A decelerating economy and dove-flipping Fed. But I’d like to know how many gold bugs aboard are also inflation bugs, commodity bugs, stock market bugs and general momentum trader bugs. I’ll bet it’s a lot.

That is a way of saying that the gold miners will be vulnerable to market pressure when all those other bugs get exterminated. I’ll bet that most gold bugs are not thinking about the right fundamentals. So many got aboard because INFLATION!! If/when the markets actually liquidate the post-2020 inflation I don’t see gold stocks resisting the pressure. Could be wrong, but it’s how I see it and how I will navigate it pending incoming information.

I am going to prepare to do more pronounced selling when I see the whites of a correction’s eyes. I think that could come sometime (+/- days, weeks) around the coming dovish Fed flip. Why? The Fed is going to flip due to deflationary pressures building (as the bond market is currently indicating per our “interim basis” theme).

But I will try to offset with some combination of holding core positions and hedging gold stocks and/or shorting the broads.

Let’s wrap ‘er up here, after another bullet pointed summary of some final items.

• Precious metals would probably like to see a continued intermediate rise in the Silver/Gold ratio and the TSX-V/TSX ratio. Commodity/resources related items would definitely like to see that. Both indicators are still laboring upward.
• Insofar as I like commodities, I continue to favor the strategic ones (Rare Earths, Uranium, PGMs) over the standard ones (Oil/Gas, base metals, Agricultural).
• As an Agri-related side note and by way of example, I took a trade on Fertilizer play IPI (originally per the weekly notes) on a hard down to support and sold its spike. Now it’s dropping back to support. I am not investing in the commodity area, but may continue to “play” it like that for a while longer.
• The US Dollar was done no favors on the weak jobs data, which along with other weakening economic data, summons a dovish Fed. But later this month, if we were to get a “sell the news” of a dovish Fed in broader markets, USD would likely get a “buy the news” and start receiving shelter-seeking liquidity. We’d also likely see a low and upturn in the Gold/Silver ratio.
• Global stocks would continue to benefit with USD weakness, near-term. In a market liquidity event? Not so much.
• Meanwhile, U.S. market sentiment is middle ground. It’s in the slop. It’s permissive for continued rally or a roll over.

But the main focus is on the best bull market out there, gold. I am going to let Old Turkey have the final word:

“It’s a bull market, you know.”

Portfolio

Gold is and has been viewed as long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size.

I have been slowly schlepping some funds from the slightly higher income of the Premium Class MM (FZDXX) to FZFXX, which has a slightly lower payout but holds Treasury bills, which are the safest thing in the world of debt paper. But with the Fed about to start cutting money market payouts, the goal is to continue funneling into Treasury bonds, with a pronounced weighting to short-term 1-3yr, 3-7yr. Out in the future, this will be changed if/when the next inflation problem is cooked up. But for now, we are “interim”.

The account holds some play-around Tech stocks, a few healthcare stocks, a few resources related stocks (including speculative TSX-V listed basket items) and my favorite gold stocks, miners and royalties.

The taxable account carries very high cash levels as long as cash and equivalents are paying out. This is considered a savings account of sorts, rather than a speculation or even investment vehicle. The goal is to speculate around the periphery of that. In another market phase (e.g. post-crash), the account may get much more in the game.

Trading Account

Short NVDA

Roth IRA (non-taxable, no contributions)

The chart explains my highly technical, highly professional management style at the moment. :-)

Risk is all around as the profits build, and I am managing as such.

Cash and equivalents are 79%, including the 7-10yr Treasury “spec” (straight cash: 38%). Again, a mix of items with the conviction stuff being miners like AEM, EQX, NGD, etc. and PM royalties. We have the basket items aplenty as well, led by Talon, with Metallic Minerals playing some catch up and even little Ni “me too!” Bitterroot gaining some attention as CEO Michael Carr was interviewed about its prospects. Michael is a solid dude.

Generally, I remain in week-to-week mode, with the next high energy event likely being FOMC.

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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