The August 31st edition of Notes From the Rabbit Hole went deep into gold, silver and especially the miners this week (to the near exclusion of most other markets), discussing near-term technical probabilities and long-term fundamental views, along with a lot of other “need to know” details on this now booming sector. NFTRH 878 closed with something of a big picture macro/philosophical view before wrapping up with the Portfolios segment.

Big Picture Macro & Precious Metals Bottom Line

It’s a bull market, baby (or per Old Turkey, “it’s a bull market, you know”). Thrills and spills ahead.

But the supporting theme is the new macro and its new rules that we’ve anticipated since the 30yr Treasury yield Continuum broke to the upside in 2022. Since then the job has been to interpret the implications of this big picture macro trend break, along with other indicators of major change.

(Click on image to enlarge)

The long-term SPX/Gold chart above [included in this excerpt per edit below] hearkens back to the 1970s. So, in essence, does the Continuum’s long disinflationary trend, which was birthed in the 1980s after Fed chief Volcker whipped inflation through very hawkish interest rate policy in the 1970s.

The then new trend in disinflationary bond market signaling allowed policymakers of subsequent decades to routinely paint prosperity into the macro at will. This was most obvious during the Inflation onDemand era, launched compliments of Alan Greenspan, post-2001. But that was not real prosperity. It was inflationary policy, given license by the long bond’s decades of disinflationary signaling (thank you, Volcker), a license that became ever more abusive post-Greenspan.

It was the core reason we now have a society so divided. As I have written many times, it is the act of inflating money supplies and monetary aggregates through bond market manipulation that has fabulously benefited the wealthy and routinely impaired the not wealthy. This is the root of our social problems.

In modern day reality TV America, the easy target is the other political party. And why not? They are both bankrupt of truly transformative ideas that would be helpful to a healthy society. They are little more than corporate divisions of particular ideologies that in my opinion are way past their shelf lives, as currently practiced.

So the Everyman blames the other side of the aisle, because the Everyman is programmed that way. We are TV programmed as a whole, while alternate media from YouTube to Substack * to X put forth everything from sound, progressive and thoughtful ways forward to utter ignorance and hatred. But at least they are saying what they think. Unlike major media, saying most often what its corporate boardrooms think.

Well, that programming is done. It’s just that a vast majority don’t know it yet because a vast majority don’t know that the macro framework has changed or more importantly, the implications of that change. The bond market signaling circa 1987-2022 is done. The stage is set for the preeminent monetary asset to rise as monetary policy is rendered more dysfunctional than the pre-2022 era.

This is my ideology speaking. I’ve quietly held this general ideology for decades. But now, it is time. The two charts of gold in relation to the S&P 500 included in this edition [each included below] show the profound changes in the monetary value asset vs. the prime inflation-stoked paper asset. They also show that on the big picture, we ain’t seen nothin’ yet.

In the short-term, as we have shown in the report above, gold stocks are at a target and a classic technical halt/correction point. A correction from such an overbought state could feel quite severe. That’s the TA. Know if you’re a trader or a holder.

But there are other options in play here, from upside laser show to chop & grind. The former does not feel as likely as the latter.

Regardless, per the changes to the macro that became symbolically evident in 2022, and especially per gold’s long-term status vs. the stock market, it’s likely early innings in the bull market.

* Nod to Substack for having a much higher ratio of quality to ignorance than the other two, in my opinion.

[edit] Here are the two charts showing a compelling case for gold over stocks in the new macro. The first being a very long-term chart of the SPX/Gold ratio showing the case for major stock market under-performance, even if nominal prices go sideways. The second chart is self-explanatory. A bubble in gold? Gold has not even gotten going yet on a relative basis to the market that benefited from all of that inflationary policy, pre-2022.

(Click on image to enlarge)

More By This Author: