All's Well in Gold

Nothing broken. Yet...

WHAT has been going on since mid-February is a burst of the 'inflation trade', writes Gary Tanashian in his Notes from the Rabbit Hole, as evidenced by silver's leadership in the precious metals sector.

This opened the barn door for all kinds of inflated animals to flee into the light of day, and for commodity and inflation boosters to do their thing. As often happens with silver, things were pushed to and even through their limits. Silver went up, oil went up, base metals went up and stocks went up.

But what we should do is retire back to some of the things that actually indicated bullish for the gold sector well before the mini hysteria (and market relief) cropped up. A pullback/correction in gold stocks would be an opportunity.

Gold vs. Silver [aka the Gold/Silver Ratio] took a real hit and now is bouncing, unsurprisingly as the US Dollar makes a final support bounce attempt of its own.

Gold vs. Crude Oil also got drubbed of late but remains in a big picture uptrend.

Gold vs. S&P 500 remains bullish and possibly breaking consolidation. But if you see the stock market down and so is gold, the meaning is that gold pumped with all the other stuff recently and so some of that stink will stick to it in the short-term.

Finally, Gold vs. Long-term US Treasury Bonds is still very constructive, rising off the bottom in an upward tilting inverted Head & Shoulders pattern above its moving averages.

This last chart is a view of the 'risk off' hard asset compared to the 'risk off' paper debt instrument, subject to government borrowing/spending and Federal Reserve policy machinations. So, it's a confidence indicator.