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The Equity Bubble Bursts

HIGHLIGHTS

  • Regime: The equity bubble has popped
  • Macro: Real rates rise yet price holds
  • Valuation: Fair value
  • Flows and Sentiment: Bullish
  • Technical: Base building

REGIME

  1. Short-term real interest rates are below 1.8%. TRUE
  2. The gold price, measured in a basket of currencies, is rising, measured by a 35-month exponential moving average. TRUE
  3. The gold price relative to the S&P 500, measured by a 35-month exponential. FORECAST FOR 2022.

Gold’s turn

Source: Bloomberg. As described since 1/10/2018.

MACRO

Source: FINRA. Number of bonds rising versus falling since 2007.
Source: FINRA. Change in margin debt since 1960.
Source: Bloomberg, BTAM

VALUATION, FLOWS AND SENTIMENT

Gold still in the fair value range

Source: Bloomberg. Morris gold fair value methodologies and gold past three years. To see this model, please visit ByteTree Terminal where it is updated daily.
Source: Minack Advisers

No one is speculating on gold anymore

Source: Bloomberg. Leveraged gold ETFS long less short assets $000s since 2012.

SUMMARY

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