Gold & Silver Stocks Belie COT Caution

We all know that the gold and silver Commitments of Traders are very extended and at levels of commercial net shorts and large spec net longs that tend to be in place at tops in the metals. Well, the metals topped in the summer, so what does that tell us?

For one thing, it tells us that bull market rules are different from bear market rules as per this post from August as gold was topping.

Gold and Silver Commitments of Traders for This Week

Listen sports fans, I just call ’em as I see ’em. The Commitments of Traders for gold is as extended as it has been lately and open interest is significant. Speculators are all-in here and while we note that bull market rules are different than bear market rules, extended is extended. Gold is vulnerable to pullback by this measure, especially since the gold price is in the target zone we laid out months ago.

Gold dropped about 100 bucks an ounce from the time of that post and yet the CoT are not cured. Talk about bull market rules! CoT was and is a reason for a level of caution, but as noted last weekend in NFTRH 579 the charts of several miners we track (and I own) belied a cautious stance.

From #579…

The way things appear to be setting up is that the miners are preparing to be a ‘go to’ play when the stock market party burns out. Despite the caution begged by the gold and silver Commitments of Traders, the chart of HUI, the Gold/SPX ratio on page 30 and the fact that Friday was a holiday shortened affair, the overall look of our charts this week is constructive to bullish

HUI has gone on to have a thus far bullish week this week with a move to break the post-summer consolidation and as we’ve noted in NFTRH, the HUI/Gold ratio has remained intact and is also now in a bullish stance. It’s a leader, as is the Silver ETF vs. silver. Get a load of this. Continue reading "Gold & Silver Stocks Belie COT Caution"

Today vs. 2012; Different This Time For Gold

Gold bugs will remember 2012 as the last year of hope that gold was still in its bull cycle as it managed to hold key support around 1550 into year-end. It should not be lost on us that here into year-end 2019 gold’s new bull cycle has risen to, and logically halted at, the very same former support that is now important resistance to a new bull market.

We anticipated this resistance in the summer, and although the up-turning Semi cycle of 2013 was logical to gold’s demise 7 years ago, that is no longer the case as Semiconductor leadership takes a new leg up in 2019. Why? Well, let’s explore just a few of the differences between then and now.

gold

Difference #1: The Yield Curve

The post-crisis era into 2012 was “inflation all the way baby!” as so well stated by my friend, the late Jonathan Auerbach back in Q4 2008. It was monetary fire hoses all day every day and policy makers didn’t care who knew it. There was a major systemic meltdown of the previous inflation in play and of course, our heroes at the Fed fought that realized risk with more of what created it in the first place, balls-out inflationary policy.

The crowning achievement – and gold killer – of post-crisis policy was 2011’s Operation Twist and its stated mission of controlling the yield curve, as Twist’s agenda to buy long-term Treasury bonds and sell short-term Treasury bonds was the very essence of a flattener. That cannot be disputed. Bernanke kicked off the great flattening and gold was done for years to come. Continue reading "Today vs. 2012; Different This Time For Gold"

Updating The 3 Amigos And The Global Macro Message

This morning in pre-market the Amigos’ futures charts update the macro story…

global macro

…which goes something like this…

Copper, the cyclical Amigo (weekly chart) has furthered the intermediate trend line break we noted on October 25th. This is in line with the rally in US and global stock markets and even more so, the global macro reflation theme. It does not look so impressive yet on this weekly chart, but other components of the macro trade are starting to look impressive, especially on daily charts. So… steady as she goes. Continue reading "Updating The 3 Amigos And The Global Macro Message"

Silver & Gold To Inform Dr. Copper

They call copper the metal with the Ph.D. in Economics. But these days Doctor Copper is little more than a quack in that regard, taking a cue from the metals whose interplay will be critical to deciding the coming macro for 2020 and the run-up to the next US election. Thus, they are the 3 Metallic Amigos, riding together but providing different signals at different times (this being nftrh.com, you will have to put up with the odd shtick from time to time).

Silver Gold Copper

As we have noted repeatedly, the Silver/Gold ratio takes it place alongside other indicators (like long-term Treasury yields, yield curve, TIPs ratios, inflation breakevens, etc.) of a would-be inflationary environment. When silver (more cyclical, commodity-like characteristics) rises vs. gold (more counter-cyclical, liquidity haven characteristics) it is a hint toward an inflationary macro.

A daily chart of silver/gold shows a constructive ratio at yesterday’s close and this morning in pre-market silver is +2.77% while gold is +.77%. The implication could well be an end to the current bull flag consolidation at the moving averages and the next upturn in silver/gold, the miners and possibly the inflation/reflation trades that tend to follow. Continue reading "Silver & Gold To Inform Dr. Copper"

The Gold Stock Correction And What Lays Ahead

What’s In-Play Now

It has been about 2 months since the gold stock sector, as represented by the HUI index, topped out. The ensuing correction has been a whipsaw affair of ups and downs, but smoothing that volatility out we find an ongoing correction in time and price that has not been too difficult to manage.

The pattern that some would call a “complex H&S” (TA-speak for a freakish pattern with too many shoulders) held a key lower high on the recent bounce to the daily chart’s SMA 50 (blue line). The neckline has been tested (and held) twice since it was created in September and the negative RSI divergence that began last summer has been guiding Huey downward.

hui

It’s all normal and by the chart above you can see the targets, which have been 195 (minor support) and better support at the convergence of a lot of markers, including major breakout support and a gap at 180, the rising SMA 200 (183), a 62% Fib retrace (182) and finally, the pattern’s measurement at around 172. That’s a lot of technical traffic pointing to the 170s-180s for the correction’s ultimate goal, which is to wash out the excess.

And excess there sure was, as we noted well ahead of time in NFTRH using this chart showing how far HUI got ahead of what I consider the most important macro fundamental indicator for the sector, gold vs. stocks and in particular gold vs. the US S&P 500. Continue reading "The Gold Stock Correction And What Lays Ahead"