Gold News

Gold Rally: This Time Is Different

A little, at least. One key thing is the same – the long-term economic contraction...
WE WON'T declare that this time gold stocks are going to exercise an excellent risk vs. reward stance compared with the US stock market, writes Gary Tanashian in his Notes from the Rabbit Hole.
But we do declare that the stimulus for the recent out -performance is much healthier than it was last summer, during the last bounce.
Recall that was a time when Russia was sending armor into Ukraine and the pom-poms came out in the gold sector, as if geopolitics have anything to do with investment merit.
In the current case, commodities are tanking, the 'real' price of gold (vs. commodities) is rising and there is a whiff of economic contraction in the air. That is much different than last summer.
The daily chart above shows a break above the recent highs in GDX-SPY and a green MACD. And this time the only hype in the air that I can find is about how global deflation is going to destroy gold stocks.
If the macro environment is going negative, it is the proper one for a constructive case on counter-cyclical gold mining.
To review, here's the big picture risk vs. reward chart that is compelling if indeed the global macro is shifting in favor of counter cyclical items (eg, gold mining).
And here, once again, is the compelling big picture view of gold vs. commodities. It has indicated all along that we never officially exited the long-term global economic contraction environment.

Gary Tanashian successfully owned and operated a progressive medical component manufacturing company for 21 years, through various economic cycles. This experience gave Gary an understanding of and appreciation for global macroeconomics as it relates to individual markets and sectors. Along the way, Gary developed an almost geek-like interest in technical analysis (TA), to add to a long-time interest in human psychology. Various unique macro market ratio indicators were also added to the mix, with the result being a financial market newsletter, Notes From the Rabbit Hole (NFTRH) that combines these attributes.

See the full archive of Gary Tanashian.

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