Gold, US Stocks And Bonds

I’ll try to keep things simple with this recap of the 3 of the 5 major food groups (leaving aside commodities and currencies) for investors. No confusing you today with too many inter-market ratios, overly technical language or cute metaphors like the 3 Amigos (although it is notable that Amigo #2 is stopping exactly as we’d forecast, as you’ll see in the Bonds segment below).

So let’s take a technical look at larger picture of the 3 groups using weekly charts for gold and SPX and a monthly for 30yr bond yields, along with some thoughts. 

Gold

For the sake of your financial well being, continue to tune out inflation, trade wars, shooting wars, Ebola, China demand and Indian wedding season as reasons to be bullish the relic, it’s wilder little brother, silver, and the miners. Continue to tune in to gold’s standing vs. stocks and other risk ‘on’ assets along with investor confidence, the economy, interest rate dynamics (including the yield curve) and to an extent, the state of your local currency.

As to the chart, the latest decline is a pullback of close to 100 bucks an ounce, but it occurs within a series of higher lows. It also occurs as we have been tracking a sector bounce and fleshing out some mildly positive short-term sector internals. If gold makes a lower low, say goodnight for a while. But do you suppose that if it bottoms here the next rally could be the one that finally breaks long-term resistance? The thing looks spring loaded and rising volume shows conviction building.

gold

Silver and the miners continue to consolidate the big up turns of 1st half 2016 and the sector will be ready for prime time when the real fundamentals come into play. Again, tune out the China/India “Love Trade” crap. Tune out fixations on war, politics and even inflation. Tune in to gold’s relationship with the risk ‘on’ world, tune in to forward economic indicators and tune in to bond yield dynamics.

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We’ll reserve the shorter-term technical management for subscriber updates and weekly NFTRH reports. 

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