Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

AMAT Chirps, b2b Ramps, Yellen Hawks and Gold’s Fundamentals Erode

Commodities / Gold and Silver 2016 May 31, 2016 - 06:07 AM GMT

By: Gary_Tanashian

Commodities

If we are going to highlight improving fundamentals, which we did as gold out performed commodities and stock markets, then we also have to highlight and respect eroding fundamentals; no ifs, ands or buts.

The plain and simple fact is that the Semiconductor Equipment sector is firming, with the April Book-to-Bill (b2b) joining Applied Materials’ quarterly report noted in NFTRH 396’s opening segment as another bullish [economic] indicator. Semi Equipment was a leader to the general Semi sector in early 2013, which in turn led the economy and job creation. Our fundamental gold view improved in January 2016 as gold launched upward vs. global stock markets, joining its positive status vs. commodities.


Today, gold is losing that performance vs. stocks and now the positive Semiconductor discussion in NFTRH 396 is more positive still, after the b2b numbers. Sentimentrader had a piece on Wednesday entitled “Economic reports are not keeping up” (with stock prices). I have seen this elsewhere and we have recently included graphs from Yardeni.com showing the same thing.

But that is why we follow a cycle leader like Semi equipment, not the laggards. It’s implication at least, is that future economic reports will catch up.

For her part, Janet Yellen had this to say on Friday: “It’s appropriate — and I have said this in the past—for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate.”

If the SEMI b2b improvement is not a blip and things proceed in a logical manner for the economy, they will raise the Funds Rate as stated. That will not be good for gold unless what develops is an inflationary ‘Fed’s behind the curve’ type of situation.

I know there are a lot of gold bulls in the subscriber base and I am not trying to alarm anyone. This cycle could be completely different than 2013, if the inflation/deflation dynamics are different, as I suspect they are. But here is a simple monthly chart of gold showing when we became alerted to Semi equipment firming in January of 2013, and gold then having the worst 3 month stretch of its bear market that April through June.

Could an inflationary phase lift all boats, including the gold sector? Well, we were right about the Semi cycle in 2013 but I was personally wrong in initially thinking it may be a potential inflationary signal. It was not. Global deflation and US ‘Goldilocks’ ensued. Maybe this time, if indeed the economy firms as indicated, it will be an inflationary phase. But I am not willing to gamble on that outcome with the gold sector. Not until gold proves it can hold up vs. stock markets. Here is gold vs. SPX…

Here we should consider that even in an inflationary phase there would probably be many other places to invest besides gold mining, which would not be special as the average gold promoter might try to portray. Gold mining is special during economic contraction.

Speaking of gold promoters, the assumptions out there are heavily leaning to a new gold bull market. Even most bears are only assuming a correction and buying opportunity. I would guard against automatic thinking as long as the fundamentals are wobbling.

But assuming the economy is going to bump up (this is still just an indicator-based extrapolation after all), for the gold bugs to remain on the soap box they will need inflationary effects to manifest, unlike the post-2011 period. Here is a modified version of a chart from a post about inflation last week adding gold, silver, commodities and emerging markets to the view of the S&P 500.

In the best case (the Greenspan 2003-2007 era) gold and silver rose but commodities and EM’s rose even better (after gold had led the launch phase in 2001-2002).

Just some perspective for the next time your local card carrying gold bug gets persuasive about and transfixed by gold in a vacuum. There is a world out there and it is subject to inflation. It would be a time to speculate in a more well rounded way, with actual gold being a sensible part of a portfolio, as insurance and monetary value.

NFTRH 397 went on to cover the gold sector fundamental and technical situation in detail as well as US and global stocks (many but not all markets are at the intersection of Bull Avenue), commodities, currencies and more on the prospect of an inflationary economic growth phase.  We also had a look at the Robotics industry further to the discussion at the site last week.  Finally, several NFTRH+ trade ideas were updated as well using daily and weekly charts.

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) 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.

By Gary Tanashian

http://biiwii.com

© 2016 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