This note was originally published January 04, 2013 at 11:19 in Macro
POSITIONS: Short Gold (GLD) and Gold Miners (GDX)
The bear case for gold just got a lot better this week.
Gold (and Bonds) do not like it when the slope of growth moves from slowing to stabilizing. Why would they? That’s the end-of-the-world type stuff.
From a long-term perspective, we think Gold is a bubble that’s already popping. We only make that claim when something is making a series of lower long-term highs (see the chart below).
Across our core risk management durations in Gold, here are the lines that matter to me most:
- Intermediate-term TREND resistance = 1699
- Long-term TAIL resistance = 1671
- Immediate-term TRADE resistance = 1665
In other words, Gold is now confirming that it is in a quantitative Bearish Formation (bearish TRADE, TREND, and TAIL).
Since it’s way over-owned by Institutional Money Managers who had never owned if before (ostensibly because they were bullish on growth and other productive assets at the time), and the fundamentals (Global Growth and US Employment Growth stabilizing) are confirming our quantitative signal, we are staying with it.
If you’d like our longer form bearish research notes on Gold that we published in Q412 under our Q4 Global Macro Theme “Bubble #3”, let us know.
Keith R. McCullough
Chief Executive Officer