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Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

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Gold's Full House

Using the Macrocosm theme again (I can't get enough of this gimmick) let's update some key gold ratios in poker terms.

Macrocosm

Gold is currently working on a 'full house', with three of a kind (gold out performs stock markets, gold rises vs. commodities and gold rises vs. global currencies). We can call the pair needed to complete the full house economic contraction (to varying degrees globally) and confidence declines.


Gold vs. Stock Markets

Gold vs. developed world stock markets is bullish and consolidating. This is a critical macro consideration to the gold sector investment case and these weekly charts show trends changing vs. all world stock markets. The ratios are in consolidation as gold itself consolidates and markets bounce.

Gold:SPX Weekly Chart

Gold:STOXX50 Weekly Chart

Gold:TSX Weekly Chart

Gold:FTSE Weekly Chart

Gold:Nikkei Weekly Chart

Gold vs. Commodities is wildly bullish and consolidating a bit.

Gold:CRB Weekly Chart

Gold:Crude Oil Weekly Chart

Gold:Copper Weekly Chart

Gold:Palladium Weekly Chart

Gold vs. Currencies shows a breakout from a downtrend in Euros, consolidation above support in 'commodity currencies' of Canada and Australia, a breakout attempt in Yen and a clear vote of confidence in the risk 'off' metallic monetary asset vs. a paper risk 'off' note (Swissy).

Gold:Euro Weekly Chart

Hold:Canadian Dollar Weekly Chart

Gold:Australian Dollar Weekly Chart

Golkd:Yen Weekly Chart

Gold:swiss Franc Weekly Chart

Finally, in keeping with the poker theme, what beats a full house? 'Four of a kind'. Gold vs. the all-important US Treasury bond market is working on its 3rd week in trying to deal with the first restraining moving average. The pictures above show waning confidence and if this one (indicating confidence in a conventional risk 'off' repository vs. gold) joins them we will have four of a kind in gold's favor.

Gold:USB Weekly Chart

Obviously, 'five of a kind' would be ideal. While the 4th card above looks to be in process, the 5th is not. That's the 'yield curves rise' planet in the macrocosm. Whether calculated by dividing the 10 by the 2 or subtracting it, this curve is not yet rising. The implication is that the game has not completely turned the table on the Federal Reserve with respect to the market's confidence.

Gold:US 10-Year Treasury Weekly Chart


Bottom Line

Through all the years of gold bugs clicking the heels of their ruby slippers, demanding that inflation would drive gold higher any day now, it was the macro indicators that would tell the story. As we entered 2016 they began telling a story of a counter-cyclical environment that would be necessary to launch the gold sector. The story, or game, is not yet over but the odds are now in gold's favor. Prepare for volatility and opportunity as the process continues.

 


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