Weekly Recap (7/5/2024)

AU: $2387 ($2324 - Last Week Spot)
AG: $31.06 (29.02)
HUI: 284 (267)
DXY: 104.5 (105.8)
S&P: 5567 (5459)
10-Yr: 4.27% (4.36%)
Oil: $83 ($81)

Once again, the stock market roared to another ATH, with the S&P 500 closing at 5567. Ironically, the underlying macro data was precarious. The Services PMI data was under 50 in June. That means services are in contraction, and joined Manufacturing PMI data, which has been sub 50 for several months. The jobs number today was around 200K, which isn't great, and the unemployment rate rose to 4.1%. The Atlanta Fed has their Q2 GDP forecast at 1.5%, and Wall St didn't blink. Wall St continues to believe that they can count on the Fed to keep the economy growing. I think they are delusional.

My take is the stock market is peaking, and will begin to roll over at any moment. In July, I'm expecting knife wounds. Nothing life-threatening, but enough to begin the bleeding. I don't know how many knife wounds it will take to stop the stock market from rising, but I don't think it will be long now. We will then go sideways for a few weeks before the bleeding economy becomes a serious issue. The path is clear to me: 5500, 5200, 5000, and then 4800. Wall St will remain bullish until we drop below 5000, and then the stampede begins at 4800. Can we get to the election before reaching 4800? My guess is no. Stay tuned.

Gold held $2300 once again, which it has held since early March. Gold is telling us a story, and it's not a good one. We have stocks at an ATH, and gold is also near an ATH. That never happens, and to make it even stranger, the dollar has remained strong (the dollar and gold are supposed to have an inverse relationship). What is gold telling us? That something bad is going to happen. Gold is telling us that it wants to go higher when the dollar finally falls. Gold is a flashing red light.

Silver is also telling us a story. It recently ran from $25 to $32.50, and then corrected back to sub $29, closing last week at $29.02. Then, this week, it decided to follow gold higher, and closed over $31. Silver closed over $34 in Shanghai this week. I think that is helping. The gold price in Shanghai is nearly the same as New York. The silver premium has been around 10% in Shanghai for a few months now, sometimes reaching 15%. 

I think the new floor for gold is $2200. If it corrects below this level in 2024, I don't think it will last, and we can expect a quick rebound. Silver is starting to sniff this out. And with the gold floor at $2200, it's not a stretch to think that gold could lead here and not even retest $2200. I think there is a good chance we could see $2600 to $2700 by year-end. At a 60 GSR, that takes silver to $40 to $45. It's hard not to be bullish.