Before I get into the what the timing models are indicating, I want to take a step back and look at the money supply figures used in the models. A significant component in the timing models are the money supply relative gold price, and the money supply I use is the non-seasonally adjusted M2. I use the non seasonally adjusted numbers as the other inputs (such as gold prices and gold miner stock indexes) are not seasonally adjusted either. This makes the comparison more apples-to-apples. That said, using the non-seasonally adjusted figures can lead to forecast errors in money supply projections. As you may remember, I have to project money supply out two weeks (at the very least) because the Federal Reserve reports these figures with a lag.
One of data items I track is the 1-week and 2-month change in current money supply versus average historic results. Not only can this be illustrative of the the present economic environment, but it can give insight into future money supply levels. The following two charts shows the change in money, on certain weeks in the year, on weekly and 2-month basis.
1 week
2-Month
What these charts show is that the period to period change in money supply has generally followed the historic seasonal patterns. If changes in money supply follow the same historic trends, money supply should increase in the weeks to come, and help lead to improvements in the timing models, as else being equal. Funny thing though, the change in the money supply has been trend since the first weeks of the year. Why? I really do not know. One would logically suppose that QE infinity would have lead to higher growth rates in money. Does this suggest a weaker overall economy or something else entirely? Either way, something to watch.
Getting back to the timing models, there really has not been much change in the model results since last week. The timing models continue to plumb the bottom of range. There was a slight tick up in the 2-month model on slightly lower expected money supply and the effects of time. Either way, the 1-year model remains in a strong buy range, and the joint 1-year/6month model indicator also points to a decent entry for gold/precious metal stocks.
The following show the timing models updated for current data along with present results.
3-Month, -1.7
1-Year, -2.1
6-Month, -1.7
One of data items I track is the 1-week and 2-month change in current money supply versus average historic results. Not only can this be illustrative of the the present economic environment, but it can give insight into future money supply levels. The following two charts shows the change in money, on certain weeks in the year, on weekly and 2-month basis.
1 week
2-Month
What these charts show is that the period to period change in money supply has generally followed the historic seasonal patterns. If changes in money supply follow the same historic trends, money supply should increase in the weeks to come, and help lead to improvements in the timing models, as else being equal. Funny thing though, the change in the money supply has been trend since the first weeks of the year. Why? I really do not know. One would logically suppose that QE infinity would have lead to higher growth rates in money. Does this suggest a weaker overall economy or something else entirely? Either way, something to watch.
Getting back to the timing models, there really has not been much change in the model results since last week. The timing models continue to plumb the bottom of range. There was a slight tick up in the 2-month model on slightly lower expected money supply and the effects of time. Either way, the 1-year model remains in a strong buy range, and the joint 1-year/6month model indicator also points to a decent entry for gold/precious metal stocks.
The following show the timing models updated for current data along with present results.
3-Month, -1.7
1-Year, -2.1
6-Month, -1.7
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