Mid-Week Macro (11/13/2024)

Mid-Week Macro

1) We have now had 6 trading days since the Trump victory. The stock market has remained strong, with the S&P closing at 5985 today. The dollar has been very strong, jumping from below 104 on election day to 106.4 today. The 10-Year bond has also been strong, closing today at 4.45%. Conversely, the strong dollar has whacked gold/silver and the miners. Gold is down to $2572. Silver down to $30.28. And the HUI down to 284. The HUI was at 354 a couple of weeks ago. That is a 20% correction in two weeks. Ouch. 

2) This correction in gold/silver/miners is likely over, or will be over soon. Gold is not likely to stay down for long. That’s the good news. The bad news is that gold/silver/miners are once again trapped in a trading range waiting for the stock market to roll over. I doubt we will see a breakout in gold/silver/miners for a few months. What could be the driver to get gold back to $2900, silver to $35, and the HUI back above 350? With the Trump honeymoon in effect, the odds imply we could be waiting a while. My guess is 3, 6, or 9 months. Ouch. 

3) It’s the same story. The S&P 500 is the most important data point for gold/silver/miners. Until it rolls over, they are trapped. The good news is that Trump is being handed an economy that is weakening, inflation that won’t go away, a consumer that is broke, a banking system that is reeling, housing and auto sectors that are in a recession, and a budget deficit that is out of control. My guess is that the honeymoon will end, and we will get a market crash. That could happen before inauguration day (January 20th), but not likely. 

4) The best case for gold/silver/miners in the near term is that they trend a bit higher before the coming stock market crash finally arrives.