I sold my NUGT several says ago and all of my miners yesterday — all for profit might I add — because the technicals have turned grim for gold. What has changed in recent weeks?
We were long gold for two reasons.
1. Risk aversion, negative correlation to SPY.
2. The specter of actual inflation and a hands off Fed.
In recent weeks, not only has the market roared back, but we’ve heard hints from Apple suppliers, like AMKR, that things are getting better in the economy. If that’s the case, then the following things should occur.
The 10 yr bond yield should rise to 3.2% again, presently at 2.75%.
The Fed will come back into the fray, eager to hike rates.
Inflation, as defined in terms of wage growth, will be offset by rising expenses in healthcare, carrying costs for loans, real estate values etc.
In other words, the more you get to thinking about actual inflation, the more you understand that 97% of the country will likely be stuck in a world devoid of it — thanks to rising cost of living. There is inflation, in a sense, but it’s being gobbled up whole by asshole corporations and enjoyed and seen in their quarterly earnings reports. The best hope for the working class to have a little extra money to spend at the olde shopping mall is for a COMPLETE FUCKING MELTDOWN and reduction in rate, followed by government stimulus.
Gold is dead — because the market and the economy is alive.
Even if my thesis was wrong, you have no business being long now — given the break down in the technicals.
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Agreud… and M. Savage made the same call a day or so back. He thinks it’s just an ICL, however, and maybe even the YCL, to be followed by BtFO.
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