Counter-Cyclical Winds Blow, Gold Miners Front And Center

As the stock market cracked on October 10th we noted… Looks Who’s Holding Firm Amid the Carnage; the Gold Miners

And sure enough the GDX bottoming pattern noted in that post (and before that in an NFTRH subscriber update) played out perfectly amid the stock market carnage going on all around it.

Was I trying to predict something? Of course not. I was just following general rules we’ve had in place through all of NFTRH’s 10-plus year history and privately for myself since early in the bull market that began in 2001. Very simply, the counter-cyclical winds must blow and the Macrocosm must come front and center for a constructive fundamental view of the gold stock sector. That first crack in the stock market was a good start.

With respect to the Gold vs. Stocks planet, the S&P 500 topped vs. gold right at our targeted resistance…

…and has been repelled back to pre-Trump rally support, as expected. The above is a monthly chart for which time moves slowly. Keep in mind that no matter how bullish things get for gold/gold stocks in the near to intermediate-term a case still exists for the SPX/Gold ratio to one day close that upper gap and end the major bull market in stocks.

With respect to other fundamentals, the Yield Curve remains a holdout as it continues to flatten, and a decline in confidence is probably early in process (with an accent on “process” as that is what it is and it will take time). But what of the other prominent fundamental condition, Economic Contraction, which would signal a counter-cyclical economic backdrop?

Yesterday before the Fed rolled over evidently to the surprise of some (but not the pros, as CME traders had forecast almost no chance of a hike over the next three meetings and they are stacking odds that the Fed is done for 2019 (with a few even starting to see a 2019 rate cut), per this NFTRH 536 excerpt posted on Sunday, before the fact… Fed Doves Take Flight

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