Macroeconomic: Long Bonds/Stocks, Short Gold
Updated
Gold bug's biggest complaint is ALWAYS manipulation of Gold prices... Enter: exhibit 1.
This is the spread between Bonds and Gold, and it has reached maturity and should reverse from here IMHO.
With yields at 3%, banks will enter the bond market en masse, hedging that position with a short on Gold.
With yields finally attractive, the US DX will also continue to rally which will be good for both bonds and stocks.
For Gold, here you can see the EW justification for a return to lower levels as part of a 4th wave (before eventually making new highs).
Then a zoom in on the current breakdown:
I think a short position in Gold is justified, as well as long Stocks. The bottom in Bonds has not yet shown itself but could be any minute or day IMHO.
I think the biggest risk to this macroeconomic analysis is that we will see a deflation across multiple assets as a result of rising rates, which will be apparent if stocks don’t rally and bonds continue lower.
This is the spread between Bonds and Gold, and it has reached maturity and should reverse from here IMHO.
With yields at 3%, banks will enter the bond market en masse, hedging that position with a short on Gold.
With yields finally attractive, the US DX will also continue to rally which will be good for both bonds and stocks.
For Gold, here you can see the EW justification for a return to lower levels as part of a 4th wave (before eventually making new highs).
Then a zoom in on the current breakdown:
I think a short position in Gold is justified, as well as long Stocks. The bottom in Bonds has not yet shown itself but could be any minute or day IMHO.
I think the biggest risk to this macroeconomic analysis is that we will see a deflation across multiple assets as a result of rising rates, which will be apparent if stocks don’t rally and bonds continue lower.
Note
Meant to include my Bonds chart... Note
Update 1...The dollar has continued to rally.
Gold has certainly fallen, and may continue lower next week.
Stocks however, I think ES will target 3800 next week as Fed meeting approaches May 4th I think it is... If they manage to hold here then an ending diagonal would certainly be a plausible end to the largest run ever.
Bonds do look like they have another leg down here...
Note
This would honestly be an insanely perfect spot for a double bottom at 4100 on S&P and showcase the market's ability to price-in events ahead of time.tvc-invdn-com.investing.com/data/tvc_52cb9d7313bfd7d6c569ba4c94920cd0.png
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