Loading ...But that is not why gold is important in the modern macro markets. It is important as a monetary way station, where patient investors can park their value during a phase when all manner of speculations are being successfully encouraged by global policy making. This too, shall pass.
Swiss Gold Referendum
Here is where the negative hype may get loud. First, in the run up to the vote Citi’s Willem Buiter basically lost his mind in a crazy screed against gold. This is good. What would be even better is a strong negative reaction in the gold market off of this news because it too, like the India news to the positive side, has little to do with the real fundamentals for the gold sector. It could usher in an opportunity by clearing out the speculators and hangers on, and that is why it is good.
It does not pay to get bullish on the gold sector when it is in favor (ref. the summer hype phase centered on Russia and Ukraine, the damage from which was illustrated in an eLetter dated September 5). The time to be bullish is when it is well hated. Mr. Buiter with a quick follow up no vote in Switzerland should about do the trick coming as it comes against already pervasively bearish sentiment.
Macro Fundamentals
Tell me, how rational is a market that rewards a sector for having its fundamentals improve by selling off? When gold exploded higher vs. crude oil and yet the miners got hammered, that is exactly what happened. It is yet another sign of developing opportunity.
To be clear, there are several more macro fundamental indicators that NFTRH routinely tracks, which have not yet come in line. But I thought this was a nice, contrarian signal. Now let’s see some more of them, perhaps beginning with Swiss referendum fallout hype!
Bottom Line
We’ll clip it here but I want to summarize by saying that hype is everywhere and nowhere has it been more damaging than in the gold market. But today’s damage will be tomorrow’s opportunity. Please consider checking assumptions at the door and pay attention to the macro details.