All that glitters has become more attractive in my opinion. This is as the price of gold has declined in recent weeks, on a number of items including that a resolution of the debt ceiling would lead more certainty and an improved economy, a thesis that has entered the lexicon of the Street despite what I have shown as no relationship between economic growth and gold. More so, there does appear to be a weaker relationship between the price of gold and increasing government debt, suggesting that a raising in the debt ceiling is gold positive. That said, the Street's bear thesis is what it is. Although the thesis more than likely leaves many holders of gold, like myself, questioning past trading decisions, at the very least the recent decline in gold and gold-related investments provides further opportunity to increase exposures.
With that, on to the timing models. Although money supply growth continues to decelerate year-on-year, M2 has experienced an acceleration of sorts in the past few weeks, due in part to seasonal trends. The upward moves in the supply of money has coincided with downward lurches in both the the yellow metal and the related long-centric investments. All in, the models have marked an improvement over the last week and month. I show the latest results below.
6-Month Model, present rating -1.35 versus -0.89 last week and -0.84 last month.
1-Year Model, -1.39, vs. -1.23 and -1.3
2-Year Model, -2 vs. -1.84 and -1.95
Risk Model, Remains positive but is falling.
Although I think you and I should keep a watch on the risks at this juncture, noting that the risk measure has fallen back towards the zero demarcation, I still think that gold equities remain attractive. For one, the technicals here look may be pointing towards to a long-term turn. Additionally, the risk measure remains positive while the timing models remain in a buy target zone. This is as money continues to printed into existence by the Fed and the government is set once again to borrow more money.
With that, on to the timing models. Although money supply growth continues to decelerate year-on-year, M2 has experienced an acceleration of sorts in the past few weeks, due in part to seasonal trends. The upward moves in the supply of money has coincided with downward lurches in both the the yellow metal and the related long-centric investments. All in, the models have marked an improvement over the last week and month. I show the latest results below.
6-Month Model, present rating -1.35 versus -0.89 last week and -0.84 last month.
1-Year Model, -1.39, vs. -1.23 and -1.3
2-Year Model, -2 vs. -1.84 and -1.95
Risk Model, Remains positive but is falling.
Although I think you and I should keep a watch on the risks at this juncture, noting that the risk measure has fallen back towards the zero demarcation, I still think that gold equities remain attractive. For one, the technicals here look may be pointing towards to a long-term turn. Additionally, the risk measure remains positive while the timing models remain in a buy target zone. This is as money continues to printed into existence by the Fed and the government is set once again to borrow more money.
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