GoldNuggets — Gold Top, Bull Case
GoldNuggets Digest: gold topping signal, US dollar bear, commodity bubbles, long-term gold price drivers, silver vs gold bull case...
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Gold Volatility Spike
- of remarks on gold downside risks: “our composite valuation indicator is at extreme expensive levels and we just saw a spike in gold market implied volatility (common exhaustion indicator; suggests a period of consolidation). Sentiment and positioning are also rolling over from overbought levels.“ (source)
US Dollar
One tailwind for gold however is the declining US Dollar. After failed breakouts higher in recent years we’re certainly on watch for failed breakdowns, but so far this break down looks good + with fundamental supports (US dollar is overvalued, yield support fading, policy uncertainty/governance risk, sentiment and positioning capitulating bearish from previous consensus bullish). (source)
Commodity Bubbles
Here’s a bull case set of past bubble analogs for gold (and silver). “21st Century Bullion bull has a long way to run still“. (source)
Gold vs US Money Supply & Debt
This is something we track closely too (in the monthly chart pack), and a key set of fundamental drivers for gold: “Historically, gold prices have tracked the expansion of the money supply and have responded to increases in US government debt“. (source)
Silver vs Gold
Tavi Costa notes on the bull case for Silver: “Over the past 125 years, the ratio has only spent brief moments above the 100 level — extremes like this tend not to persist for long. If history is any guide, this doesn’t look like the time to be overly bearish on silver, in my view.“ (source)
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ICYMI: Previous edition GoldNuggets — Flows, Metals, Miners
GoldNuggets — Flows, Metals, Miners
The GoldNuggets Digest is our free publication. It contains "nuggets" of Charts & Research that come across our desk on gold/macro which we think might be interesting and useful for investors.
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I have no special knowledge; However, I see some things which suggest that this time 'things really are different'?
Firstly, the lack of a confirmatory spike in the Silver Prices, suggest that the monetary component has not yet come into play in this cycle (If it is a Cycle?)
Secondly, the restrained margin and maintenance deposits suggest that the Exchanges and commercial banks, have not committed to a position in this market. (Perhaps they do not dare until they can understand the forces driving the increase in the Gold prices?)
Thirdly, The increase in the price of Gold is not yet sufficient to threaten market structure or to tax the finances of Nation State actors. At the present, these prices only serve to threaten the credibility of those entities which might be forced to default on obligations.
Such an opportunity would not have been squandered without Global consequences. I suppose we will see in the near future.