Messy macro chart comin' at ya. It is not trying to deliver any kind of message in particular but it is trying to offer a glimpse into some different phases in recent financial history and the attendant correlations and lack thereof.You know I was uncomfortable during the 'inflation boom' years with the gold miners' close correlation to their cost inputs like oil, base metals and human resources. You also may know I had a bearish potential for gold (chart below) back in March on the old COW as I was well spooked by the pervasive bullishness in the sector. But it was just potential and I failed to account for the degree to which the outlandish commodity complex bullishness would hurt my stance.
So be it. We look forward while always learning from the past. And looking forward, I see things coming back into line and as I have always said, fear rides shotgun in this sector. Bad stuff - including high profile newsletters going bearish on technical breakdowns - often prove bullish in the end as the herd follows the negativity right out the door. But I am committed to the idea of a stable anchor amid global funny munny and I am looking for a strong rally in the companies that mine or collect royalty on that anchor as the fear inevitably turns to greed one day. This even as the deflation scare that has been anticipated for years now kicks off phase 1.
The coming rally may or may not be sold depending upon what I see fundamentally. The chart below shows a perfectly viable decline to 700-750 in gold that will not kill the bull. It will simply kill the remaining holders who do not know what or why they hold.
