Gold & Gold Stock Fundamentals Will Be Strongest in 2025

Summary

In this edition of Macro Mondays, Jordan discusses the strengthening fundamentals for gold and gold stocks, suggesting a potential significant rise in the coming months. He analyzes the yield curve, noting its steepening as a key indicator, and predicts a recession signal. Jordan emphasizes gold's performance post-Fed rate cuts and its bullish trend against commodities and various stock indices. He concludes that gold stocks are poised for a strong performance against inflation, setting the stage for a 'sweet spot' in the gold market.

Takeaways

• 📅 The video was recorded on Monday, September 9th, 2024.
• 📈 Jordan discusses the strengthening fundamentals for gold and gold stocks, predicting a significant shift in 3 to 6 months.
• 📊 The key development is the yield spread between the 10-year and 2-year treasury yields, which has inverted for a record amount of time.
• 🔍 The yield curve's steepening is a critical indicator, with the potential to signal a recession if it continues to steepen aggressively.
• 💹 Jordan anticipates that the yield curve will steepen, influenced by possible Federal Reserve rate cuts and a firming of the 10-year yield.
• 🏆 Gold divided by the S&P 500 is at 0.46, and a significant move upwards could indicate a substantial rise in gold prices.
• 📊 Gold is outperforming against various markets, including commodities, which is positive for mining margins.
• 📈 Gold against the stock market is setting up for a bullish pattern, with potential breakouts above resistance levels.
• 💼 The stock market appears tired in nominal terms, while gold is positioned to continue its upward trend.
• 🌟 A breakout in gold against the stock market could lead to a significant increase in gold and precious metals, especially if tech stocks falter.

Q & A

What is the main topic of discussion in Jordan's video?

The main topic of discussion is the strengthening fundamentals for both gold and gold stocks, and the potential for gold stocks to become very strong in the coming 3 to 6 months.

What key economic indicator is Jordan focusing on in the video?

Jordan is focusing on the yield spread between the 10-year and 2-year treasury yields, which is a key indicator for predicting economic recessions and the performance of gold stocks.

What is the significance of the yield curve being inverted?

An inverted yield curve, where short-term interest rates are higher than long-term rates, is often seen as a predictor of a potential economic recession.

How does Jordan interpret the current state of the yield curve?

Jordan interprets the current state of the yield curve as a 'red alert' situation, suggesting that it has gone positive and may continue to steepen, signaling a possible recession.

What does Jordan predict regarding the Federal Reserve's actions in the future?

Jordan predicts that the Federal Reserve will likely cut interest rates in the future, which could contribute to the steepening of the yield curve.

What is the current ratio of gold to the S&P 500, and what does Jordan suggest it indicates?

The current ratio of gold to the S&P 500 is 0.46. Jordan suggests that if this ratio breaks above 0.50, it could signal a significant upward move for gold and precious metals.

How does Jordan view the performance of gold against commodities?

Jordan views the performance of gold against commodities as 'super bullish,' indicating a strong breakout and a positive sign for mining margins.

What does Jordan suggest about the relationship between gold and the stock market?

Jordan suggests that gold is currently underperforming against the stock market, but he anticipates a breakout where gold will outperform, which would be a positive sign for precious metals.

What is the significance of gold outperforming tech stocks according to Jordan?

According to Jordan, gold outperforming tech stocks, which have been holding the market up, is a good sign for precious metals and could indicate a significant shift in market dynamics.

What is Jordan's outlook for gold stocks in the next 6 to 18 months?

Jordan's outlook for gold stocks in the next 6 to 18 months is positive, suggesting that they are setting up for a 'real sweet spot' fundamentally due to favorable conditions such as potential rate cuts and inflation.

Outlines

00:00

📈 Gold and Stock Market Fundamentals Strengthening

Jordan discusses the improving fundamentals for gold and gold stocks, suggesting a potential significant increase in value within the next 3 to 6 months. He analyzes the 'gold macro chart' which includes data on the Fed funds rate, yield curve differences, S&P 500 performance, gold's value relative to the S&P 500, and the real 10-year yield. Jordan highlights the yield spread between the 10-year and 2-year yields, noting its inversion and the possibility of it steepening, which historically has signaled economic recessions. He anticipates aggressive steepening, which could negatively impact the stock market but positively for gold. Jordan also points out that gold's ratio to the S&P 500 is at a critical level, hinting at a potential major increase in gold's value. He concludes by emphasizing the importance of the real 10-year yield in the context of rate cuts and its influence on gold prices.

05:01

💹 Bullish Trends for Gold Against Commodities and Stock Market

In the second paragraph, Jordan examines gold's performance against various commodities and stock market indices, indicating a bullish trend. Gold has reached a three and a half year high against commodities, which is favorable for mining margins. He also discusses gold's performance against different stock market indices, including the S&P 500, the equal-weighted S&P 500, and the NASDAQ. Jordan notes that gold's ratio to these indices shows promising patterns, suggesting an upcoming breakout that could lead to new highs. He emphasizes the significance of gold's ratio to the S&P 500, stating that a breakout above 0.50 would be highly beneficial for precious metals. Additionally, he mentions gold's performance against the Consumer Price Index (CPI), indicating that gold is near a breakout from a 45-year base, which is a strong fundamental indicator for gold and silver stocks. Jordan concludes by suggesting that the current market conditions are setting up for a 'sweet spot' for gold stocks in the coming months to a couple of years.

Keywords

💡Gold

Gold is a precious metal that is often seen as a safe-haven investment during economic uncertainty. In the video, the speaker discusses the strengthening fundamentals for gold, suggesting that it could see significant price increases in the coming months. The video's theme revolves around the potential for gold to outperform other assets, especially as economic indicators shift.

💡Gold Stocks

Gold stocks refer to shares in companies that are involved in the mining and production of gold. The video suggests that the fundamentals for gold stocks are also strengthening, which could lead to increased investment opportunities. The speaker anticipates that within three to six months, the fundamentals for gold stocks could be very strong, indicating a positive outlook for investors.

💡Yield Curve

The yield curve is a graphical representation of the interest rates on debt for a range of maturities. It is a key economic indicator used to predict economic conditions. In the video, the speaker discusses the yield curve's steepening, which is the difference between the 10-year and 2-year yields, as a significant development that could signal a recession and impact gold prices.

💡Real 10-Year Yield

The real 10-year yield is the yield on a 10-year government bond adjusted for inflation. It is an important metric for investors as it reflects the return on investment after accounting for inflation. The video mentions that as the Federal Reserve cuts rates, the real 10-year yield could decline, which historically has been a positive sign for gold and precious metals.

💡FED Funds

FED Funds refer to the Federal Reserve's overnight lending rate to banks. Changes in this rate can have significant impacts on the economy and financial markets. The video suggests that the speaker anticipates rate cuts from the Federal Reserve, which could contribute to the steepening of the yield curve and potentially benefit gold prices.

💡S&P 500

The S&P 500 is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States. It is often used as a proxy for the overall U.S. stock market. In the video, the speaker uses the S&P 500 as a benchmark to compare against gold, discussing the ratio of gold to the S&P 500 as an indicator of gold's relative performance.

💡Macro Mondays

Macro Mondays is a term used in the video to refer to the speaker's weekly analysis of macroeconomic trends and their impact on financial markets. It is a recurring segment where the speaker discusses topics like gold, stocks, and economic indicators, providing insights into the broader economic environment.

💡Rate Cuts

Rate cuts refer to a central bank's decision to lower interest rates to stimulate economic activity. The video discusses the potential for rate cuts by the Federal Reserve, which could lead to a decrease in real interest rates and an increase in gold prices, as historically, gold tends to perform well in low-interest-rate environments.

💡Precious Metals

Precious metals include gold, silver, platinum, and palladium, which are valued for their rarity and are often used as investment assets. The video's theme includes the potential for precious metals, particularly gold, to perform well due to strengthening fundamentals and economic indicators that suggest a favorable environment for these assets.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The video mentions gold's performance against inflation, suggesting that if gold continues to rise while inflation remains stable, it could be a positive sign for gold mining companies and their profitability.

💡Commodities

Commodities are basic goods used in commerce that are interchangeable with other goods of the same type. The video discusses gold's performance against other commodities, indicating that gold has outperformed commodities like oil, which could be a positive sign for gold mining companies as it suggests higher margins and profitability.

Highlights

The fundamentals for both gold and gold stocks are starting to strengthen.

A potential significant move in gold stocks is predicted within 3 to 6 months.

The yield spread between the 10 and 2-year treasury notes is a key economic indicator.

The yield curve has been inverted for a record amount of time, even more than in 1929.

The yield curve's steepening could signal a recession, which is typically negative for the stock market but positive for gold.

Gold divided by the S&P 500 is at 0.46, indicating a potential for gold to rise significantly.

Gold's performance historically improves after the start of rate cuts.

Gold is outperforming commodities, which is a positive sign for mining margins.

Gold against the equal weight commodity basket has broken out, indicating a bullish trend.

Gold against the stock market is setting up for a bullish pattern in the coming months.

A breakout of gold against the NASDAQ could signal a new high for gold.

Gold's performance against inflation is near breaking out of a 45-year base, which is a strong fundamental indicator for gold and silver stocks.

Gold stocks are fundamentally set for a 'sweet spot' in the next 6 to 18 months.

The stock market appears tired in nominal terms, suggesting potential weakness.

Gold in nominal terms is positioned to continue its upward trend.

A breakout of gold against the stock market is anticipated, which would be a significant game changer.

Transcripts

hello everyone this is Jordan this video

is being recorded on

Monday September 9th

2024 thank you for joining me for this

edition of macro Mondays coming to you a

little late I know it's afternoon

evening time but had to get this out for

you and today I'm going to talk about

how the fundamentals for both gold and

gold stocks are starting to strengthen

and how I think maybe in 3 months 6

months somewhere in there the

fundamentals for Golden gold stocks

could be very very strong let's get to

some charts okay so first I call this my

gold macro chart we have a bunch of

different data in here we have the FED

funds right here yield curve difference

between the 10-year yield and the 2-year

yield the stock market here S&P 500 then

we have gold divided by the s& P 500 and

then we have the real 10-year yield and

so we've been talking about this in the

past few weeks the past few months and

this is the key thing that's happening

right now key development I should say

is the yield spread between the 10 and

twoyear which is what most people follow

is steepening I mean if not if you're

not saying steepening it's rising so

it's been inverted for a record amount

of time I think even more inverted than

it was in 1929

but being inverted is not necessarily

negative it's when it uninverted and

goes positive and then steepens so the

real question is will this continue to

steepen and Rise really aggressively you

know move like sharply higher or will it

just Meander around the zero line

because there's a few examples here

where it meandered around the zero line

and you didn't have a recession like

here's one where the recession was in

1990 not that long of a recession you

know the yield curve it uninverted in

early '89 but then you could see here it

meandered around for a while before

really

steepening and same thing happened here

in the late '90s 97 98 99 so the curve I

guess it it inverted then uninverted by

a very very tiny level it steepened a

little bit but for the most part you

could see from the end of 97 almost to

2000 it just meandered around the zero

line and you didn't have a recession

until

2001 and then here you had the clear

sharp steepening above zero same thing

happened here 2007 so that's the

question now it has gone positive so

this is a real red alert thing but will

it continue to steepen and move higher

aggressively or will it just Meander

around the zero line I tend to think

that it's probably going to steepen at

least somewhat aggressively I don't

think it's going to going to meander

around that line because I do think

you're going to see some Fed rate Cuts

maybe the long end of the curve the

10year at some point that will probably

the rate will probably start to firm and

stop falling and so that's how you could

kind of get the steepening so that's my

view look for some real steepening there

eventually so I think it's going to

Signal a recession at least a soft

recession and that'll be negative for

the stock market and this is the key

indicator for precious metals right now

gold divided by the S&P p500 close at

0.46 and this is setting up boy I've set

it before I'll say it again if you get a

big move like this and if you get

steepening real steepening this is what

will happen you get a big move like that

that's setting the stage for go to go

gold to go a lot higher not just 3,000

or 3500 it can go a lot higher if that

happens and the last point on that this

line marks the start of rate cuts and so

gold against the S&P

it really started to perform after rate

cut started so you can see here this is

another example here 2019 here took a

little bit you know then more Cuts with

covid so this is setting up for I think

at some point in the coming months uh a

big move higher a big breakout above

050 and I threw in here the real 10-year

yield because with these rate Cuts we

can see that starts Cuts here the real

interest rates are going down they

started down here then you got more Cuts

so what's happening here you know the

cut this has already started to move

lower then it'll accelerate more to the

downside as we get more Cuts so looking

at the macro for gold I think it's safe

to say that it's setting up very very

positively for gold and you know

precious metals beyond that once gold

gets moving so let's look at gold

against a number of markets here we have

gold against Commodities I mean the rest

of these charts are gold against stocks

but gold against commodities

I mean this has broken out so this is

looking super bullish I mean this is

what is this uh 3 and a half yeah like a

three and a half year high you know

breakout a couple months ago just

beautiful pattern breakout if you look

at gold against the crb or gold gold

against oil it looks the same this is

gold against the equal weight commodity

basket so I mean this is a real positive

for Miners and Mining margins over the

next few quarters so outperforming ities

that's exactly what you want to see and

coming back to Gold against the stock

market I like to break this down and

look at more ratios Beyond just gold

against the S&P 500 which is here here

we have gold against the equal S&P 500

so this is all 500 stocks equal weighted

gold divided by that and this is setting

up for a I mean this is a very bullish

pattern here they're just setting up for

a move in the coming months to make a

move like that gold against the NASDAQ

we know know that the mag 7 those those

tech stocks they have been holding the

market up holding gold back and you it's

interesting cuz looking at this you

could have a monster double bottom here

where this is the first and then this

double bottom here is actually the

second part of a big double bottom but

here this could also be a Mini double

bottom here so I like the action here

closed at

557 um really close to Breaking Above

This resistance so if we get some follow

through here

and not much has to happen this could

break out and that would be a new 52e

high so who knows maybe this looks like

it could break out before this

here ultimately once we see gold

outperforming and breaking out it's the

mag s tech stocks at large that's a

really good sign for precious medals so

keep an eye on this chart because I

think it's going to l lead this chart

and look I'm just a broken record here I

can just I don't even need to talk I can

just insert something I've said in past

videos or even something I said a couple

minutes ago 0.46 here 050 this baby

breaks above 050 and you get some follow

through that's Heaven that's that's

nervon that's turbo Nirvana for gold and

precious medals so that's what we need

and again a breakout here that's going

to be 3 and a half your high so this is

the charts are setting up very bullishly

for precious medals maybe not in the

next week or the next month but I do

think eventually we are going to see

gold against the stock market finally

break out and one point on that if you

look at the stock market just in nominal

terms it looks tired you know it's it's

due to even if it's just a mild bare

Market you you'll get all these rate

cuts fiscal stimulus could come next

spring and you look at Golden nominal

terms golden nominal terms is in

position to continue to Trend higher

whereas the stock Market looks kind of

heavy so looking at those individually I

can definitely see

this sometime here making a big breakout

to the upside that's a huge game changer

people and last thing I talked about how

gold is really outperforming the

Commodities here and this is a really

you know oil especially or all

Commodities really and that is a really

good sign for mining margins and I just

want to remind you this is gold against

the CPI this is close to breaking out of

a 45-year base and you look at the baren

gold mining index you can see that gold

against inflation that's the best

fundamental indicator for gold and

silver stocks if we see a big move

higher in Gold that continue to move

higher we're probably going to see this

thing move up here like this and these

margin increases they're going to flow

right to the bottom line for mining

companies like cost inflation is not a

problem so that's why over the next call

it 6 to 12 18 months we're setting up

for a real sweet spot here for the gold

stocks fundamentally so that's it for

the video let me know what you think

please leave a comment and I'll talk to

you guys again in another video on

Wednesday thank you so much