Macro Storm Coming to Gold
Flow Show Comment: Obvious Gold Bears are Obvious
Authored by GoldFix ZH Edit
Intro: Find below some thoughts on Gold post reading Hartnett’s Flow Show report (that analysis out today)
Contents:
- Macro Storm Coming
- Secular Bull vs Macro Bear
- Gold Bears Are Predictable
- Bulls May Not Get Spooked This Time
- The Macro Bull Case
- The Super-Stag Case
Macro Storm Coming
Everything about Hartnett’s report this week is bearish for gold. He doesn't talk about gold negatively at all, but everything he's talking about in there is bearish for gold. It is bearish for stocks more, but it is somewhat bearish for Gold as well. Unless the Fed eases.
Secular Bull vs Macro Bear
The pricing of gold is now entering a battle between secular forces like BRICS, US debt, entrenched anti-Goldilocks inflation, Mercantilism, etc on the one hand. And on the other hand, bearish macroeconomic/financial forces are about to assert themselves.
What we need to keep in mind is the secular forces that drive gold and silver higher have not changed. But the macroeconomic forces are going to assert themselves now
When the economics of a marketplace turn bearish, especially in gold, that encourages the short players or the bear players to get confident.
Gold Bears Are Predictable
Bears will then lean on it because they see things corroborating their projected opinions. That's going to happen. It is happening. It will affect the bear behavior.
Analogously; They are watching a football game down 21-0 with 5 minutes left on the clock. But their team has the ball. So the bears get pumped up a little.
We therefore *know* what the bears will try to do now that macro data is turning.
Bulls May Not Get Spooked This Time
How confident are they in their secular opinions? Will they be scared out because of the macroeconomic info? Historically, they're easily scared out.
The question now is, Do the longs have the confidence to stay in? If gold cracks lower $300, then you know that the macro discretionary buyers and the CTA commitment wasn't very strong,
If that happens, we're going to be looking to the central banks to see if they're going to be buying again. Central Banks are the secular buyers. Unless the BRICs kiss and make-up with the G7 overnight that cohort will be buying. The question is at what price. The key to the BRICs in a bear move is China. If their economy is in trouble, they will back off. If not, then they will happily buy dips. As China goes, so go the BRICS and increasingly the G7.
Which brings us back to the macro situation
The Unlikely Macro Bull Case Exists
If the macroeconomic discretionary buyers do not puke (as somewhat expected up top) on the bad economic information likely coming out for gold, well, then they’ve really got the banks on the run.
Because when the macro cycle eventually turns bullish for gold again... then Bullion banks are possibly not going to have bought back as much as they want to buy. And that would be is a beautiful thing. They will *not* have covered their shorts to book profits and to facilitate their market-making operations in the next cycle. They will not have enough bullets reloaded to sell. Their bear profit cycle will have been short-circuited.
That's what we're looking out for moving forward. But right now, just know that this report is nothing about gold. But everything he's talking about here is bearish for gold. So the question is, how bearish will it be? If sideways is all they can do during this time, then we have a much bigger leg higher coming when the macro turns. But not until then
The Super-Stag Case
Everything bearish observed above is bearish for stocks, not gold per se. But Gold gets sold as well during these cycles. It is these cycles that cause the banks to flex and make gold look as bad as stocks to dissuade ownership.
P.S using Hartnett's rationale.- It feels like stagflation, Buy Gold short stocks/bonds avoid Bitcoin. If you believe the Fed will ease on a soft landing, buy Bitcoin and Bonds/ Stocks, avoid Gold. Crash landing: Bonds, then buy Gold and Stocks and Bitcoin, and everything else to benefit from the next easing.
More here
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