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.
Finally, we have seen the obvious (what most people will now take note of) kickoff to a short-term correction in the precious metals. Depending on the fundamental picture, we can plan on taking advantage of a buying opportunity as we have been noting over last couple of weeks.
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.
We have not checked in on this motley crew at the public site in a long time (NFTRH keeps a running tab each week). Here are the monthly views of the basket cases we call major currencies.
Uncle Buck and his reserve status were leveraged to the hilt by “The Hero” and now his successor is trying to gently talk the Fed out of its policy stance over time. In other words, tightening is going to come one way or another and Janet Yellen is trying to go the orderly route. When this process becomes disorderly, the USD is likely to benefit from the liquidations elsewhere in the asset world.
Technically, USD is in a long basing pattern. There are those who think it is basing before a renewed decline, reading a Symmetrical Triangle (continuation) pattern into poor old Unc. I think the odds are it is bottoming over the post-2008 years when inflation – try as they might to have promoted it – simply has not taken root *. Leaning bullish, watch support and resistance.
Gold got blown up in 2 days with respect to the short-term rally. Watch for gold to bottom before silver as we likely transition into a phase of gold leadership over silver. Key support is from the 1300 down to 1270.
The entire rally in the precious metals since early June has come against a backdrop of short-term yields rising faster than long-term yields. In other words, it has come against a risk ‘ON’ atmosphere in which there is little anxiety about inflation or systemic stress. That is not favorable for gold.
What has the precious metals rally had going for it? Not the chart above, that’s for sure. It has had gold’s price vs. some commodities (esp. crude oil) and stocks bouncing and that’s a positive. It had the blip in GDP going for it. It also had a massive speculative short covering and long-biased momentum play in silver. It had the usual gold bug touting about geopolitical strife and finally, some bank in Portugal crapping out.
But the chart above is not bullish for gold and it joins the CoT data for gold and especially silver as a negative, which finally manifested to some degree yesterday. Now the idea is to find the buying opportunity. Now it gets fun if yesterday (actually last Thursday, with the big bearish candles on the miners that NFTRH noted) was the start of the periodic games known (around here, anyway) as the Running of the Gold Bugs.
What comes next is a sharper focus on the nature of the fundamental backdrop if/as the sector declines toward some logical support areas. NFTRH? Yes, it’ll be on that job.