A quick snapshot of the current picture of some market internals and indications, most of which is a review and update of pictures we’ve been reviewing along the way during this bullish year.
Beginning with the combo of the Healthcare/Broad & Consumer Staples/Discretionary ratios, we see one making a good hint toward a defensive sector over the broad market and the other not yet making such a hint, although bouncing a bit within its downtrend.
When both of these are rising the signal would be anti-speculation at best, anti-bull at worst.
The bullish, risk-on leadership chain remains intact to the theme of a Q4 party season. Although it is bending downward a bit with the recent mini-pressure on markets.
In bonds, the 10-2yr yield curve continues to go sideways. So we are still in a decision phase between a resumed steepening and an interim flattening. Further steepening could bring market liquidity problems (deflationary) or resumed inflation anxieties, depending on whether nominal yields are rising (inflationary) or declining (deflationary).
An interim flattening could bring Goldilocks, an “inflation not too hot, not too cold” interpretation for party-going casino patrons.
SPX A/D line and price are in alignment. No notable divergence, positive or negative.
As noted recently, this poor timer does indicate a correction or bear market ahead.
VIX divergence is ongoing. Another slow mover.
And the disgusting look of big picture SPX vs. gold shows a bearish cycle already in play. Stock market a dead man walking already? We do note, however, that in the 1970s the stock market just hung around nominally, while being in a bear in “real” gold adjusted terms. That could also be the 2026 playbook.
Bottom Line
The situation is still in the bull camp. But bigger picture internals and indications imply some negative outcomes for stocks if the party continues and when it ends.
Gary, are we still right to be waiting for your premise that the PM Patch should be ‘unique’ among all the asset classes? We haven’t gotten there (yet?), so what does this tell us about a probable future in the Patch?
Hi Michael, great question. 2025 has been a super weird year whereby the gold miners have rallied IN LINE with positive fundamentals, but much of the rest of the macro caught on as well and is rallying. Miners have led for nearly a year now, however. Short answer is no, the sector is not unique in that other stuff is going up too. It is unique in its leadership. If/when the macro swings inflationary again I expect the play to fan out to a wider scope of the commodity sector and hence, gold miners will not be so unique. My purist view has a shelf life, in other words. Let me know if this makes sense or not.
My answer to this (had someone asked me this question and I have had a few colleagues bring it up on occasion) would have been that GDX has been phenomenal this year as it is up well over 100%. If the correction we have just had is ended and we are about to embark on another leg similar to that which we are experiencing in 2025. That would class as pretty unique! IMO. But appreciate that is yet to happen…but it might. I recall many past comments made about how Gold miners will amaze people when they really get going and that is what we have seen in 2025. Glad I never doubted it. Now everyone is using the 1970s as the playbook for what we are seeing now and based on that we have way way further to go!!. People everywhere are searching for and crying out for things that are real and trusted and stand the test of time in all aspects of life. They also becoming more and more anti things that are synthetic, processed, artificial, fake, not real. This is why I see real things becoming even more wanted of which Gold is the epitome along with other PMs, Commodities, Minerals, Tropicals, Agriculture. I see it all happening within my own industry in Food and Farming. (Speech over!)
I also see the play fanning out to more “real things” in coming months/years.
I’m down in the dumps today. Missing out really hurts. I trimmed back pretty well of mining stocks and gold and silver etf’s during the correction. After yesterday’s leap I was hoping a pullback today would be a good time to start getting back in AND THEN today’s leap hit me hard for MO (missing out). Does your vast wisdom see a little pullback soon after this big jump so a crybaby can get back in. My own experience is if I buy today IT WILL go down tomorrow. Lol. Thanks Gary
Mike, we have all been there. For me, I had several occasions during the 2003-2008 phase where I’d take profits because of degrading fundamentals and then the darn thing would go up and I’d buy higher. Sometimes you’ve gotta do that. But it’s not a good L/T strategy.
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Right now we have either a test of the highs and ongoing correction, which I have favored, or a resumption of the bull. The spanner in the works is that the broad market is still on the bull, although it has negative divergences creeping in (e.g. the XLV/SPY ratio, for one). If the broads go year-end party the precious metals could lead it. If the market rolls over hard, the PMs could make a double top.
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So yes, there is a chance of a major buying opportunity. But also of a new highs year-end party. I noted in the weekly notes yesterday that Barrick was already dinging a new high and questioned whether that is a sign of more to come or an outlier.
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This is why I keep core positions (including actual gold, obviously) and hedge when I think there may be an issue.
Thank you for the personal touch in a rough emotional time, that means a lot! One thing that helped me in my missing out anguish is I do have actual silver that I’m holding for those “higher prices.” I have been following gold and silver since the Hunt brothers and one thing I’ve learned is once they reach the sky you have to bite the bullet and let go because then the next 18 to 20 years (in some cases) they just keep going down and down and then when they get so low you have to have the wisdom and courage (along with someone who knows how to read charts) and do the hard thing and buy.
I would not extrapolate the long phases of the past to the future if indeed the macro policy bubble is bursting as I think/hope it is. Even if we are in a new, long-term bull phase for gold and silver, as I think we are, the corrections will come and can be harsh. Just not 20+ years in the wilderness harsh, IMO.