LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Market Update: Breathtaking Reversal to the Upside?
By: Clive Maund

Gold Seeker Report: This Week in Mining Issue #6 -- Temporarily Suspended Mining Operations
By: Chris Marchese, Chief Mining Analyst at GoldSeek.com

Negative real rates puts shine on Getchell's gold
By: Richard (Rick) Mills, Ahead of the herd

Gold Price Discovery of Post-QE Infinity: Gold Miners Will Become the Next Proxy for Gold Price
By: Peter Spina, GoldSeek.com

The Financial System Was FUBAR Before The Virus Crisis
By: Dave Kranzler

Precious Metals Update Video: Big action in Gold
By: Ira Epstein

Postcards from the Frontline
By: John Mauldin, Thoughts from the Frontline

COT Gold, Silver and US Dollar Index Report - March 27, 2020
By: GoldSeek.com

Gold traders are paid not to redeem Comex EFPs, London sources say
By: Chris Powell

Silver Minersí Q4í19 Fundamentals
By: Adam Hamilton

 
Search

GoldSeek Web

 
Gold to Correct as Stocks Rally


 -- Published: Tuesday, 10 September 2019 | Print  | Disqus 

Jordan Roy-Byrne CMT, MFTA

It has taken a few weeks to play out but our warning of a correction in precious metals (first on August 18) is coming to pass. 

Last week Gold, Silver and GDX all formed big bearish reversals at multi-year resistance levels. Yes, these resistance levels (Gold $1550, Silver $18.50, GDX 31) date back to 2013.

Bonds and precious metals have benefitted from the shift in Fed policy as well as fears of recession and growth in negative interest rate bonds. 

These drivers could pause or shift temporarily and that would be supportive of stocks and not precious metals. Let me explain.

First, the fears of recession are driven by the inversion of the yield curve. But the problem is the timing. 

There is a lag between the inversion and the peak in the stock market, and stocks tend to perform well during that lag period. The data below shows an average gain of 13% and an average lag time of 10 months. 

The US stock market has held up very well despite growing recession fears and persistent bearish sentiment. In the chart below we plot the S&P 500 along with two sentiment indicators.

In recent weeks, the number of AAII Bears and the put-call ratio together hit their third highest level in nearly the past seven years. Despite that sentiment, the S&P appears to be emerging from its recent lows in the manner it did in 2012 and 2016.

A sustained rally in the stock market is going to allay some recession fears and suck some capital out of bonds thereby leading to higher yields. 

This will cause precious metals to correct but that is no surprise given what the charts are already showing us. How much and how long of a correction will depend on Fed policy. 

If the Fed continues to cut rates well into 2020 then that is bullish for precious metals even if the long end of the yield curve is rising. If the Fed cuts in September and stands pat until March 2020 then precious metals will continue to correct and digest recent gains. 

Ultimately, the mix of a stronger dollar, inverted yield curve and political pressure is more likely than not to lead to continued rate cuts over the next 15 months.

Therefore if you missed the recent run in precious metals, donít panic. Itís best to be patient and let this correction run its course. Better value and new opportunities will emerge.

Jordan Roy-Byrne


| Digg This Article
 -- Published: Tuesday, 10 September 2019 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.