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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