Tag Archives: Commodities

Market Ratio Messages

Using monthly charts I want to update more big picture views of where we stand in the financial markets.  This is just a brief summary [edit; okay it's not so brief.  In fact it had to be ended abruptly or else it would have just kept on rambling] and not meant as in depth analysis with finite conclusions.

I was listening to Martin Armstrong talk about his ‘economic confidence’ model and realized that the way he views gold is similar to the way I do (and very dis-similar to the way inflationists and ‘death of the dollar’ promoters do).  I don’t love the way he writes, and I usually avoid these weird interview sites, but checked it out (linked at 321Gold) anyway and found him enjoyable to listen to.

Anyway, this prompted another big picture look at gold vs. the S&P 500 and as with the shorter-term views, the picture is not pretty.

au.spx

Well, it is pretty if you have patience and no need to promote gold as a casino play.  Gold will be ready when gold is ready and that will not be until confidence in policy making and by extension the stock market, starts to unwind.

Gold vs. SPX has meandered out of a long Falling Wedge (blue dotted) with 2008′s Fear Gap still lower.  On the big picture the risk vs. reward is with gold over the stock market.  But it is a funny thing about big pictures; they move real sloooow.  A fill of that gap may not feel so good to anyone vested in an immediate conclusion to gold’s bear market vs. SPX.

Moving on, let’s look at some ratios of components of the stock market…

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PALL-Gold vs. CCI-Gold

A good question would be which is more valid as a leading economic indicator, Palladium vs. Gold or broad Commodities vs. Gold?

PALL-Gold continues to indicate economic strength as positively correlated Palladium has just made a new high vs. Gold.  This chart along with information I got on the Semiconductor equipment sector pointed to a coming up cycle well over a year ago.

pall.gold

CCI-Gold is in a more precarious position.  These indicators do not always correlate well but have eventually come in line with each other for important economic up and down cycles.  Today PALL-Gold is flying high while CCI-Gold rolls over.

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Gold-CCI Ratio, etc.

Ssssshhhhh, while the hype and noise goes on in the broad markets about the big drop in stocks, we want to very quietly continue to follow macro indicators so that we do not get lost in any hysteria.  Gold vs. CCI (commodity index) has broken out of a bullish Falling Wedge (by weekly chart) and is bull flagging with weekly RSI above 50.  So far so good.

au.cci

Now of course people are going to say that it is the Agriculturals that are weighing down the CCI and I agree.  But the Ag’s went up hard at the beginning of the year to break CCI out of its long-term downtrend and now they, like every bubble or speculative momentum play, have popped.  It’s a net neutral on the CCI, which in nominal terms has dropped exactly to where NFTRH has been targeting per this weekly chart since it topped out at resistance…

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Economic Contraction Road Map

Just a friendly reminder from your friends here at biiwii.com that we are in an economic contraction, not an expansion when viewing the big picture.  Indeed, it is this site that has highlighted the little post-2012 expansion more vigorously than any other bearish leaning entity that I have seen, and earlier than most bullish entities I might add.

That was because of the Semiconductor Equipment ramp up → Palladium-Gold ratio → ISM upturn → Jobs upturn continuum we have been on.  But that is a positive cycle within a much larger cycle that is very negative.  Here’s the updated view of counter cyclical gold vs. cyclical commodities, which may be starting its next up turn.

au.cci

If I am right to be using this road map then I am also right in thinking that lots of people are going to find out one day what a bill of goods they bought when they (finally) bought this cyclical recovery sold to them by conventional analysis from the conventional financial services and media complexes.

Stocks & Precious Metals This Morning

Stock Markets

Well the media always need to have a reason and this morning the reason for the hard down in the stock market is apparently second thoughts by investors on the Fed Minutes and QE tapering (with a side of Portugal/European problems).

What is actually happening is that it was time for a summer disturbance (at best) due to the factors we noted in the NFTRH excerpt on Monday.  At worst the bull market is ending, but the favored plan is for a significant – possibly scary – drop that refuels the bull for one more thrust.

But that preference does not have a lot of conviction behind it.  The only conviction I have right now is that the market is/was due for a July breather and this could be it.

People should have been prepared for this.

Precious Metals

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Silver’s CCI Script

You will probably be seeing a lot of charts like this all over the internet going forward.  The now obvious breakout in silver is going to get a lot of airplay as players take yesterday as a signal of a coming bullish phase.  I mean, think about the Black Boxes and their ‘if/then’ code.  What might the ‘then’ statement do in response to this week’s ‘if’?

silver

The breakout is not surprising.  NFTRH had been noting for the last many weeks that silver was going to “break out or break down” and that it was going to do it in this general time frame.  Since I am not a Swami I refrain from making guesses, but simply try to dig up as much pertinent information as possible and get it into the analysis. *

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The Dollar & Commodities – Just Friends

Guest Post by Michael Ashton

The recent, aggressive ECB ease, combined with some mild Fed growls about increasing rates “at some point,” ought to be good news for the dollar against the Euro. And so it has been, although as you see in this weekly chart (source: Bloomberg) the weakening of the Euro has been (a) mild and (b) started more than a month before the ECB actually took action. (Note that the units here are dollars per Euro).

eur

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Gold vs. Commodities

I ask you again dear gold stock enthusiasts, please think about tuning out the wise guys with all the answers, especially when they are ranting about inflation, India, China or the coming collapse of the USD. Please filter this, for your own financial well being.

Gold must out perform commodities, stock markets and other assets for a real bull to generate in the stocks.  Here’s the state of GLD vs. DBC today.  It is one fundamental indicator with a chance to reverse upward if this support level holds.  There are others that must do so as well.

gld.dbc

Commodities Roll Over

NFTRH had projected a top of some kind (whether merely corrective or terminal) in the CCI commodity index as the leaders in Agriculture were due to roll over from excessively over bought (and over hyped).  We have been describing what has been going on in commodities as a good old fashioned rotation of rolling speculations with the hedgies, various other black boxes and momo’s playing the sector.  There is nothing but hot air to the noted support level.

cci