Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Massive Stock Market Price Reversion May Be Days or Weeks Away - 22nd Sep 19
How Russia Seized Control of the Uranium Market - 22nd Sep 19
Dow Stock Market Trend Forecast Update - 21st Sep 19
Is Stock Market Price Revaluation Event About To Happen? - 21st Sep 19
Gold Leads, Will the Rest Follow? - 21st Sep 19
Are Cowboys Really Dreaming of... Electric Trucks? - 21st Sep 19
Gold among Negative-Yielding Bonds - 20th Sep 19
Panicky Fed Flooding Overnight Markets with Cash - 20th Sep 19
Uber Stock Price Will Crash on November 6 - 20th Sep 19
Semiconductor Stocks Sector Market & Economic Leader - 20th Sep 19
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Amid Bad Fundamentals, Gold Sector Rally May Have Begun

Commodities / Gold and Silver 2017 Dec 16, 2017 - 05:13 PM GMT

By: Gary_Tanashian

Commodities

We have been expecting a seasonal rally in gold, silver and the miners off of a bottom due in either December or January, as is typical of the sector. I’ve marked up Sentimentrader‘s seasonal gold pattern to show the secondary low made (on average over 30 years) in December and the January ramp up that follows (on average).


But we’ve long contended that noise about global strife (geopolitics), inflation and most of all China/India demand need to be tuned out and the larger component planets of the Macrocosm ™ need to be respected in order to call a real bull market phase in gold and gold stocks.

Taking a quick look at the largest components, gold vs. stock markets is still bearish and the economy – new corporate welfare tax package all but in the bag – is doing just fine.

NFTRH in general and I personally am in line with this reality, long various stocks/ETFs in line with the good times. But I tell you now that Mom & Pop are very much in da house and dey is gonna be really wrong footed when the Wall Street wise guys eventually pull the rug out.

What will be the trigger? Sell the corporate tax welfare news (which the market has been discounting all along)? New year selling due to 2018’s sure to be beneficial capital gains tax environment? Or just that everyone who’s gonna buy will have bought (that’s you, Mom & Pop). Again from Sentimentrader

Herein would lie the case for gold and gold stocks’ fundamentals. We are continually updating the 3 Amigos theme (one of which is stock markets vs. gold) in order to cross reference indicators from multiple angles; but a market watcher with common sense may well look at the information above and this chart below, and just conclude… it’s coming time.

Or we can try to pick a finer point using a rather important Amigo, the S&P 500 vs. gold. Noted is a logical termination area for the wondrous, man made stock bull market that was the beneficiary of massive amounts of unconventional inflation policy, post 2008.

People talk about the “Great Recession” or “Financial Crisis” as if they were one-offs. They were not. They are part of a long-term progression into economic and financial darkness. Sorry, but the closer we come to termination (see also the Yield Curve Amigo) the more I want to avoid sugary pretense that this game we have been playing is anything normal.

The inflation, balls out and relentless, fed (no pun intended) right into the most desirable areas on this cycle. Asset owners were enriched (which is ironic since the administration under which this took place supposedly had a leveling of the socioeconomic playing field as its goal) and now an asset owner is president of the United States and he’s… anyone? Bueller? Anyone?… yes, he’s ramming home fiscal policy to benefit asset owners as far as the eye can see.

Except that my eye sees the red shaded bar in the chart above. My eye sees Ma & Pa loading the boat to finally join the party now that we’re safe from the former commie, socialist regime. I see an epic contrarian reset of all this crap coming up, with timing the issue (again the reminder that outside of dynamic events like Q4 2008, the macro moves much slower than our relatively hyperactive human brains).

But the point of my veer off into ideology and dogma is that the gold sector is going to bottom when its fundamentals utterly stink. That is because it is going to bottom when things can’t look any better for conventional players (and Ma & Pa).

Here is a daily chart we used in a recent NFTRH report showing the situation as it was during the start of the last great bull cycle in 2000. The implication is that the stock market needs to crack and investors need to start becoming aware of a bear market (remember, Nasdaq had already cracked earlier in the year). In late 2001 the S&P 500 broke down, tested and failed. Meanwhile the gold miners diverged gold and the bull was on.

So what I am doing is using short-term views like this and longer-term macro views like the 3 Amigos ™ and the Macrocosm ™ in order to be right on the spot when the real bull market begins in gold and the gold sector. It could begin sooner than we might think if the asset party blows out in spectacular fashion or it could drag for a while. So the idea is to view any coming rally in the gold sector as a bounce until some combination of macro fundamentals and/or technical milestones are exceeded.

Meanwhile, I think we get a trade-worthy rally due to the seasonal aspect, a waning of tax loss selling and a cleaning of gold bug sentiment courtesy of the recent correction.

[edit] From last weekend’s NFTRH477 regarding the Commitments of Traders (CoT):

Silver is where it gets interesting. As the metal led to the downside and some very significant Commercial short covering and large Spec long reduction (to put it in a highly technical term, they puked) went on. There was additional [price] downside after data collection and we can confidently state that silver’s CoT situation is now anything but dangerous.

Both silver (which would lead a precious metals rally) and gold experienced significant additional commercial (red & green) short covering and large spec long (blue) puking, as expected. Now, not only are the CoT anything but dangerous, they can be added to our reasoning directly above for a sector rally. Charts from Barchart.com

As also noted in NFTRH 477…

My personal plan continues to be to slowly add quality mining/royalty positions and view them as a balance to risk ‘on’ stock market positions. The plan is not yet for a major lock and load bottom. That will come after the 3 Amigos either reach their destinations or abort mission.

After a noisy week with an FOMC meeting and tax bill (mini) drama, I remain 100% on plan and we’ll be charting and tracking the situation closely in NFTRH now that risk has been bled down, opportunity is out ahead and our plans seem on track all around the macro.

Subscribe to NFTRH Premium for your 40-55 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Also, you can follow via Twitter ;@BiiwiiNFTRH, StockTwits, RSS or sign up to receive posts directly by email (right sidebar).

By Gary Tanashian

http://biiwii.com

© 2017 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules