By Gary Tanashian
Thursday’s ISM report was Thing 1 in improving the backdrop for gold. But it was a small Thing. Friday’s August Payrolls report was Thing 2, and it was a better Thing. Gold and especially the gold mining sector are invigorated fundamentally during economic easing, not during economic growth phases, inflationary or otherwise.
In this post we’ll review two of the charts (gold vs. commodities and gold vs. stock markets) we have used since before the new gold bull market began in order to update some important macro fundamentals. Most of the ratios on these charts have not broken down even as the economy and with it, stock markets have experienced a recent bounce, which we anticipated through various signals belabored repeatedly, since before the BREXIT hysterics.
In the ginned up macro atmosphere the US Fed and its global cohorts have cooked up, things move quickly and we need to move even quicker. Maybe not always in action (that depends on individual trading style) but in thought and in preparedness. We were well prepared for the ‘oops, it’s not bearish!’ phase that caught most off guard coming out of BREXIT. That was due to cross referencing different indicators. We also want to be prepared for a turn the other way, not necessarily to bearish for stocks, which as we have shown, have dutifully followed money supply (see Why the Convoluted Message From Yellen?). I don’t know about you, but I find the charts in that post to be truth tellers rising above all the noise.
So all through the post-BREXIT endorphin release we have noted in NFTRH how, despite the big stock market bounce, the buoyancy in bonds, and the resurgence of some commodities, gold somehow managed to remain intact in ratio to most of these items.