Gold's Sterner Inflation Warning

Six weeks ago [see: Gold’s Inflation Warning] we noted that GC was approaching the 3012.80 target we set in April 2024. Its ascent was an indication not only that inflation prints were likely to be worse than expected, but that the equity market faced rough times ahead.

SPX’s very obvious negative divergence strongly suggests that the index had no business making its recent new highs.

As it happened, SPX proceeded to tumble over 10% from those highs. It’s troubling, then, that GC soared right through its 3012.80 target and is approaching our next upside target.

It’s even more troubling that this is happening at a time when many equity investors have taken Powell’s soothing tone as a signal to jump back on the permabull bandwagon – despite the downright scary charts we’re seeing in equities.

Dovish Chicago Fed president Austen Goolsbee said the quiet part out loud this morning on CNBC. Stagflation is a very real concern, and one that the FOMC has little chance of mitigating.