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The Junk Bond Market topped in 2011, Commodities, as well, the Real Estate Market Topped in 2014, the Stock Market topped in 2015, and now we are seeing gold, U.S. bonds, and the dollar starting to positively correlate.
It is time to revisit with Mr. Exeter. He created a risk pyramid, that shows how investors cascade down from high risk to no risk assets as aversion and default gains steam.
To review our stance, which is years along now, the gold sector is not going anywhere until it becomes widely accepted that developed stock markets, including and especially those in the US, are in bear cycles. We have also drawn analogies to the Q4 2008 event that took place in what felt like a nanosecond compared to today’s long, drawn out process. For this reason, a better ‘comp’ has been the 1999 to 2001 time frame. That was a process as well.
Regardless, gold boosters viewing inflation as the reason to buy the sector are still out there pitching, but even they have retooled their pitches for a deflationary world. It is now and always has been a global economic contraction environment (assuming it eventually coerces policy makers into inflationary actions) that would be the primary driver of the next gold bull market. Say, whatever happened to all the stories about China demand, a China/India love trade, supply/demand capers on the COMEX and ‘US jobs to spur inflation driving big, smart institutional money into gold’ anyway?
Apologies for the very late post today. I had a morning appointment that overran badly, and it’s slower work getting charts done after the markets open and I’m then trading as well as charting.
I mentioned on twitter last night after the close that the bulls narrowly managed to avoid a 5dma three day rule breakdown with a target at a retest of the lows. There was more downside overnight that reached my ideal target on ES at a retest of the 1850 area and ES then reversed back up hard there. There is a strange myth that globex highs and lows always need to be retested soon after. I’ve been watching that for a while and have seen little evidence to support this, and there’s no need to see that here.
It wasn’t that long ago that I thought precious metals and miners might represent the only decent bullish opportunity of 2016. Well, I kind of gave up on this prospect early last week, and I don’t touch this garbage anymore. Precious metals suck, and they will continue to suck until they don’t, which could be years off. Here is the ETF for junior miners, which cracked to a lifetime low today (get used to those words – – “lifetime low” – – if you follow gold):
