Gold stock sentiment indicator.
Still seeing the odd junior gold and copper stock break through a rising trend.
Been wondering what may be the cause and I suspect the rout in tech and cryptos generating margin calls.
Most disappointing is the performance of the gold equities which have been oversold but slow to recover.
Juniors in particular are struggling to make headway.
You might think this underperformance can be attributed to the fall in the USD but the USD/AUD has been essentially flat since 1st Jan.
US gold equities are up 30% v Australia 20% (average).
The other change to the markets was the recent restrictions in leverage in Australian CFD markets, introduced on 29th March. I believe these are not necessarily tied to an asset but more like a bet with the provider on price direction. Did not see any particular impact on the bourse.
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One major difference is talk about inflation. Barely a peep from Aussie media or the RBA.
The expected CPI for the June quarter is 3% then dropping back to 1.5% for the rest of the year.
We only release data quarterly and measure very little compared to the rest of the world.
If we don't like what we see we can always change how it is measured. Just like unemployment.
If inflation comes in higher than expected then there could be pressure on the AUD which compounds the issue.
This is one of the shocks our system is prone to as we have no early warning or relatively continuous data stream such as a commodities exchange or monthly read.
There are shortages in some areas and some items are taking longer to deliver, such as computer parts. Do we even monitor the cost of used vehicles?
What we do have are governments hell bent on delivering higher and higher subsidies to first home buyers. The media are running countless programs on home flipping and negatively geared early retirees.
Homebuilding and shopping at Bunnings are about the only way we have to gauge how inflation is creeping into the domestic economy before the RBA gives us a lagging 3 month average of inflationary data. I recon a few tradies might know more about price moves than sectors of the government or RBA.
The lack of investment in the oil sector (sentiment or focus on green), as has happened to metals, could deliver an oil shock. Have to wait and see. I suspect we are going to see oil at ATH's in the near future which is inflation steroids to a low and highly dispersed population totally dependent on road traffic/goods movement.
It will be some time before we see a balance and I am not sure what that balance will be.
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This is a very nice price for gold to consolidate at. The longer it stays here the harder it will be to dislodge.
Here is the sentiment indicator after trade on Tuesday.
Bad day on the ASX today looks to have pulled down goldies with it.
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