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Picture 1: Gold vs. Bonds, Gold vs. Foreign Currencies
In this chart we plot Gold against Bonds and Gold against Foreign Currencies (the inverse of the US$ basket).
Gold and Bonds have been positively correlated recently and that hurt Gold when bond yields advanced aggressively. If this ratio can break to the upside now or soon then it will be a sign that rising rates would no longer hurt Gold or at least not hurt Gold as much. Meanwhile, we want to see Gold/FC extend its current rebound. It has only gone from ~55 to 58. We'd like to see it reach 60+. Otherwise it could peter out and threaten recent support.
Picture 2: Gold CoT
Here we plot the daily chart of Gold along with the net speculative position and open interest.
Gold has rebounded as much as $100/oz but the net speculative position has increased by only 5K contracts (from 118K to 123K contracts) and as a percentage of open interest has decreased to 26%. I'm not sure what to make of this yet. Its certainly not bearish but it could be bullish. Is it signaling that commercial hedgers are more comfortable with $1200 Gold?
This email is going out a day late as we were busy the past few days at the Metals Investor Forum in Vancouver and we spent our limited time writing, editing and publishing TDG #501 for subscribers. It was a 25-page update that among other things included extensive comments on three companies.
One of the three we own and want to buy more of (hint- it's a company from the conference), one is on our watch list and the third is a nano-cap company that could have 3x-5x potential this year. It hasn't moved but has some catalysts coming that could push the stock higher.
The sector has had a good rally and we think it can make another push higher. We will see what happens if Gold and gold stocks test upcoming resistance. I expect the next few months to be quite interesting.
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Disclaimer: This newsletter is intended for informational and educational purposes only and should not be considered
personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and do your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein.
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