Mid-Week Macro (10/2/2024)

Mid-Week Macro

1) The story remains the strong stock market, which gold is following. That means both will either go higher or lower. The stock market has not had a meaningful correction in over a year, and the S&P is up 30% over the last 12 months. I doubt we will get through Q4 without a correction. In fact, I think that the correction begins in October and will carry over into November after the US election. I’m expecting a wild Q4, and we already have the backdrop of Israel invading Lebanon and Iran bombing Israel. Plus, there was a longshoreman strike on the US East Coast. 

2) The Fed has said they will cut rates at their next two meetings. Plus, M2 is rising, and the US Government continues to spend money at a rapid pace with a $2T budget deficit. This has given investors and analysts optimism that stocks are heading higher. I’m in the other camp. I’m expecting a crash (more than 20%) in stocks in Q4. 

3) The HUI has been down this week, currently under 330. It hasn’t been able to break out. I think it is telling us to be careful and to get ready for a rug pull. Until silver gets above $35 and the HUI above $350, I will remain cautious. Above those levels, and I’ll be ready for a run to 400 on the HUI, and off to the races. My take is that we will get one final opportunity to buy the dip in Q4. I expect December to be a strong month for gold/silver/miners, and 2025 to be epic, with gold getting above $3000 and silver above $50.