We are removing Gold (ETF: GLD) from investing ideas on the bounce within a bearish @Hedgeye TREND (+1%) to step aside from the steamroll that is #QUAD4 deflation.
Both gold and oil (the most tightly correlated commodities to the USD) are bearish on an intermediate-term TREND basis vs. the USD in a bullish TREND set-up. The bearish TREND set-up for the Japanese Yen and Euro against the dollar remains intact and are models suggest these large currency moves have even more room to run.
With growth setting up to surprise to the downside in the U.S. (which was the set-up which got us into gold on the long-side back in May), deflation’s ugly head (growth slowing and rates moving lower) has more to say over the intermediate-term. Economic data continues to confirm an early cycle slowdown continues with extremely difficult CPI comps even if commodities started going down in Q4 and Q1 2015 (when inflation surprised to the upside) because of the year-over-year comparative basing effect.