Outside of the sound practice that is physical gold ownership in a time of monetary gamesmanship, the precious metals sector is all about speculation, at least according to 9 out of 10 chart jockeys and momentum junkies micro managing every short-term twist and turn.
Indeed, NFTRH manages gold, silver and the gold stocks on down to the short-term views as well, but that is only because the long-term views have stated that this is a time to be paying attention. Do we pay attention because we have waited so long to promote our orthodoxy and finally be right as gold bugs? No. We pay attention when a chart tells us to pay attention.
While we manage the shorter-term views (both macro fundamental and technical) rigorously in the weekly report and interim updates, here I’d like to dial out to the big monthly picture with 3 large (click to expand as needed) charts of HUI, Gold and Silver to see their stories, which are the reasons we are managing shorter-term views.
HUI Gold Bugs Index
First HUI monthly reviews the warnings to the analysis from 2012 and 2013. They were very clear and should have kept people out of much of harm’s way with respect to gold stock speculation.
Guess who’s now getting over sold at a support area after becoming hysterically over bought as a short-term caution signal for precious metals (and broad market) investors back in late June? Why, it’s old friend the Silver-Gold (SLV-GLD) ratio, now reset and no longer an issue from an over done speculation standpoint.
Also of interest is that the gold miners (and even the silver miners ETF) did not break down from similar looking patterns.
Of more interest still? Will the stock market gain a favorable tail wind if silver starts leading gold? That is the traditional correlation, but there has not been much traditional in that relationship over the last couple of years, so we’ll let it play out. For now, we are on a stock bounce that is sticking to its original goals as we laid out well ahead of time.
Way #1 sees the HUI Gold Ratio (HGR) below the lateral breakout line (neckline interpretation #1).
Way #2 sees it breaking neckline interpretation #2 this week.
What’s it mean? Why, gold stocks have been stronger than gold for 2.5 months now! It also means that a break above the red line would be very bullish and there is already some bullish stuff going on with this chart (ref. the panel indicators and the positive divergence to price in December and their 0+ and 50+ status).
AROON is a party pooper as it turned down due to the time this ratio – like so many other aspects of the precious metals complex – has taken taken in slogging through its potential bottoming process.
First off, I want to acknowledge the passing of Robin Williams here on this site that almost never (aside from Friday afternoons) goes off topic. Considering Williams’ passing along with that of Philip Seymour Hoffman, there is now a gaping hole in the artistic landscape. It always seems so stunning when brilliant people die too young, especially when it happens in ways that we might think could have been avoided.
Back here in the looney bin, here comes CNBC wondering about why gold cannot “find the vigor usually associated with rising fear” with respect to ongoing geopolitical strife. You know, the more I read the mainstream media, the more I believe the writers just need to churn out the info bites. Some might think it is all planted disinformation but I think it is just the watered down Zombie that is the MSM having to make quota on information, and the greater the pap quotient the better for easy digestion by millions of eyeballs.
The gold ETF vs. the crude oil ETF is banging the neckline of a bullish pattern today. Right minded gold miner bulls are not cheering for oil to drag gold upward in a hype-filled inflation party (with a side of inflammatory geopolitics). They are wanting to see gold out perform oil going forward.
Gold vs. Silver is coming around to the preferred fundamental plan, with a nice little pattern (this one however, is open to debate, fundamentally)…
Gold vs. Commodities is breaking a bullish flag…
Gold vs. Crude Oil is in a bullish pattern, but not above the neckline. This one is important to the miners…
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.
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…
[ed: Excerpted from NFTRH 301's opening segment. Those looking for paint by numbers directions and casino game instructions (talking to readers at a certain site that may or may not re-publish this article) feel free to just skip the article. You will not get what you are looking for. The balance of NFTRH 301 did the nuts and bolts technical work on the relevant US and global markets, precious metals, currencies, etc.]
[edit 2] Based on reader feedback from another site, it appears I do not understand inflation, nor that gold’s purchasing power is superior to that of the USD over the long term. What I take from this is that if you post anything positive (like USD’s ‘price’ potential) about the buck and/or negative (like gold’s price vulnerabilities) about gold certain handbook carrying people in the gold ‘community’ are going to lash out first, and read/consider second. In other words SSDD.
Take a look around the gold bull landscape and tell me how many of them are featuring a chart like this, showing the US dollar in a bullish short-term stance (to go with the weekly bullish stance we have noted for so long in the ‘Currencies’ segment).
This is not to say that the US dollar has real value. How can it when it is hopelessly dragged down by a national debt-for-growth obsession. But as with gold, value is one thing and price is quite another. It is just that one (USD) receives a price bid due to a ‘nowhere else to hide’ sort of mentality by the majority when asset market liquidity becomes constrained and the other (Gold) receives a more solid value bid, over time.
Gold led the massive Fed balance sheet expansion in 2008, rolled upward in concert with the more gently expanding balance sheet and then topped out and dove as the Fed balance sheet kept on… well, you know.
So, despite the promotion of QE 3 gold (and silver) tanked into a bear market. The question is whether or not gold is still leading the Fed’s balance of ‘asset’ holdings or whether gold through various – and well documented – official manipulations like the inflation-sanitizing Operation Twist, has some catching up to do.
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.
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.