Will Gold Bugs Finally Have Their Day?
One of the things we do is look for clues, or evidence of changes in these trends. For many years now it's been Stocks > Gold. This has been one of the sweetest trends to both watch and participate in for a long time. Watching the stubborn get killed is a great lesson in humility. Don't let it happen to you!
If we're going to make a bullish case for precious metals (and we have been since October), I think it needs to start with this chart right here: Gold vs the S&P500. This chart answers the question of, "Gold or Stocks?":
I see a bullish momentum divergence at the recent lows and failed breakdown below the lower end of this falling wedge. The way I learned it was, "From failed moves come fast moves", and I think this is precisely what is taking place.
Another relative chart that I think is worth mentioning is the Monthly Gold vs US Treasury Bonds. As a supplement to the chart above, this one answers the, "Gold or Bonds" question. It looks to me like a nice multi-year basing process looking to resolve higher:
There are a lot of intermarket relationships I'm seeing out there suggesting we want to continue to err on the long side of precious metals. From the currency angle, a weakening US Dollar tends to coincide with rising Gold prices. We discuss this in a recent podcast with John Roque. Here is the chart he sent in showing this relationship:
We want to be watching the Canadian Dollar here. Look at the relationship it has had with Gold. This is part of that Dollar story:
There are a lot of things going on in the metals space right now.
- JC
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