Yeah - I agree on gold and the market. Gold really looks to be...

Yeah - I agree on gold and the market. Gold really looks to be bottoming and so too the gold stocks.

Have a look at the US 10 year breakeven (USGGBE10 Index on bloomberg) i.e. effectively the implied inflation rate by the TIPs market or the market's expectation of future inflation. It is lower now than when the FED announced QE2, QE3, Operation Twist etc and actually the only time since 1998 it was lower than now was during the GFC and the start of QE1 (and as you know the FED is extremely scared of deflation, given it is pretty close to the worst thing possible for highly indebted borrowers like the US Government and was a disaster in the 1930s depression).

Basically the FED should be doing another round of QE or cutting rates to negative like Europe and now Japan, not raising rates. Plus the breadth in the US market looks really bad and I think the macro is not as good as some of the numbers suggest.

I think there is a good chance the FED will cut rates before they raise again -> this is quite likely good for gold, despite the clear deflationary forces currently out there.

Also, just wait until China devalues the RMB properly and becomes another major exporter of deflation to the world. But as always, trying to call the macro is extremely difficult.

BTW - none of the above would be good for any concept stock!