Gold Could see Hotter Than Expected Summer

SOURCE:[Eric Coffin] – A couple of the markets we follow closely appear to have resolved their former range bound states. Both did it in the direction I most expected, unfortunately for the gold market. Don’t despair though. Notwithstanding a mountain of negative sentiment (I think because of it) gold soon found a bottom and is moving up again. I think we are overdue for the juniors to break out of their torpor and could have a much better summer than most expect. Let’s deal with the large markets first though.

The S&P broke out of its range in late May and got to 1950 before backing off in the past few sessions. Most of the readings out of the US have been positive, though I would classify most as only moderately positive.

Revisions have largely been negative but no one pays attention to them. There would be a lot less “surprises” when major data points were released if traders checked revisions too but don’t hold your breath waiting for that sort of patience.

Traders were pleased by the latest monthly payroll report though the job gain was slightly larger but hardly the big bounce back maybe expected when winter ended. The weather excuse is getting a little old.

I’m not bearish on the US economy but there will have to be substantial acceleration later in the year if we’re going to see a 3% print for 2104 GDP growth. The numbers the US is putting up are decent but not good enough to generate that sort of growth rate by year end with Q1 growth coming in at –1.0%.

If you want some real long term perspective on the US market you can find it on the chart below. This 134 (and counting) year chart shows the price level of the S&P in real (inflation adjusted) terms using constant 2014 dollars.

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