This document summarizes recent trends in the gold and currency markets and provides an analysis of what may happen in the future. It notes that while the US dollar and bond yields have declined recently, gold has not risen significantly. This suggests gold is poised for a substantial decline once yields and the dollar reverse course. The document also examines recent improvements in the US jobs market as enhanced unemployment benefits have ended, indicating ongoing recovery that could further strengthen the dollar. Speculative traders have also increased their bullish bets on the dollar in recent weeks. Overall, the analysis concludes that gold and mining stocks are due for a significant fall once yields and the dollar resume rising trends.

1. Gold: What's Going To
Happen After The Dust
Settles?

2. Points To Be Covered Today:
• Short-Term Bullish Signals
• Should We Fear Countertrends
• USD Index (USD-DXY)
• 10-Year US Treasury Index
• Gold Tends To Perform
• Bullish Indications From The USD Index
• Allocation to the Dollar Rises

3. Short-Term Bullish Signals
• When the market wants to move down and gets short-term
bullish signals, it often ignores them or reacts weakly – and
that’s exactly what gold is doing.
• This week’s back-and-forth movement in gold, silver, and
mining stocks is neither particularly exciting nor interesting.
There is, however, some fundamental news that I would like to
cover today.
• Nonetheless, let’s start with the charts. The single notable
technical thing is today’s pre-market performance of gold vs. the
performance of silver.

4. Short-Term Bullish Signals - I

5. Should We Fear Countertrends?
• Having said that, let’s move to the less technical details and
more fundamental ones.
• Before I proceed, though, I would like to reply to a question that
I just received that will serve as a good segue from the world of
the technicals into the world of the fundamentals.
• You have made a compelling case and a very thorough one for
the decline in the precious metals market, and yet the US
treasury Bond yields decline and the USD-DXY continue to
decline.

6. Should We Fear Countertrends - I
• The analysis needs to include the countertrend that exists and how
this countertrend occurred.
• You refer to this in one-sentence statements which are not very
clear.
• There have been many short-term moves in Gold that have been
fairly substantial, and the current trend in the USD and US 10yrT
yield is significant.
• Explaining how the countertrends could and would move within your
analysis and projections would help everyone...
• The daily analyses are much appreciated and I would like to have
better understanding of the countertrend moves within your
analyses, as well as the US Fed and the ECB influence.

7. USD Index (USD-DXY)
• As far as the USD Index (USD-DXY) is concerned, then I
wouldn’t say that it “continues to decline”, as it’s been on the
rise since the beginning of this year.
• But let’s say that we’re talking about the last 2 weeks or so. In
this case, the USD Index is indeed declining.
• The highest recent closing price was 92.98 (July 20).
• Yesterday’s closing price for the USD Index was 92.09, so the
USDX is down by 0.89 – almost a full index point.

8. 10-Year US Treasury Index
• What did the 10-year yield do between those dates? The $TNX
(10-year US Treasury Index) declined from 12.09 to 11.76.
• But if we took July 13 as the starting date (the recent short-
term high in the $TNX), we would see that it moved from 14.15
to 11.76 – a substantial decline.
• Ok, what did gold do during these times? Almost nothing. Gold
moved from $1,811.40 (July 20) to $1,814.10 (August 3). So,
while the USD Index declined by almost a full index point, gold
moved higher by a mere $2.70.

9. Gold Tends To Perform
• And in the case of the TNX, between July 13 and yesterday, gold
moved from $1,809.90 to $1,814.10 (it moved higher by a mere
$4.20).
• Based on this comparison, the reply is already quite evident. What if
these trends continue? If these trends continue, gold is likely to do…
Nothing.
• Based on how gold tends to perform (based on the 2008 and 2011-
2013 analogies), it’s time for gold to fall, and to fall hard. If it was just
gold that was performing just as it did in all those years, it might not
have been as critical. But gold stocks (the HUI Index) are doing the
same thing! They are also repeating what happened in all those
years. And based on these analogies, the markets are about to slide.

10. Bullish Indications From The USD Index
• Now, what does the market do if it wants to move in a given
direction (here: down) and it gets bullish signals from other
markets or the from news? It ignores them. This could take the
form of reacting in a weak manner and then, after the dust
settles, moving slowly back down. That’s exactly what gold has
been doing.
• The bullish indications from the USD Index (reminder: they are
of a very short-term nature only; the USDX tends to rally after
bottoming in the middle of the year) and bond yields are simply
delaying the PMs’ slide.

11. Bullish Indications From The USD Index - I
• At the same time, gold, silver, and mining stocks act like a
spring that’s being coiled with bigger force.
• It doesn’t move, but when something finally changes (yields and
the USDX move higher), something big (here: decline in the
PMs) is likely to happen.
• Having said that, let’s move to the more fundamental part of the
analysis.
• I will also discuss the situation in bond yields more thoroughly in
the upcoming analyses.

12. USD Index
• With the USD Index patiently waiting for the release of the
U.S. nonfarm payrolls report on Aug. 6, the greenback has recorded
a muted start to the month.
• However, if payrolls outperform and investors accelerate the U.S.
Federal Reserve’s (FED) taper timeline, a U.S. dollar surge could
happen sooner rather than later.
• In the interim, though, the U.S. labor market is trending in the right
direction.
• Case in point: while Gusto – a software company that provides
cloud-based payroll, benefits and human resource management
solutions for U.S. businesses – largely downplayed the end of
enhanced unemployment benefits in many states, an excerpt from
the Jul. 27 report read:

13. Work In Progress
• “Looking at employment trends by employee age, we
observe that around the time of governors’
announcements in the first week of May.
• Hiring rates for workers 25 and older rose in states
ending these benefits early.
• Which indicates that UI did play a role in the labor
supply decisions of a group of adult workers.”

14. Work In Progress - I

15. Work In Progress - II
• The black line above tracks the cumulative headcount of adults 25
and older in the states where enhanced unemployment benefits
ended early.
• While the brown line above tracks the same cohort in states where
enhanced unemployment benefits are still in play.
• If you analyze the acceleration of the black line, it’s clear that fiscal
benefits have impacted U.S. citizens’ desire to find employment.
• Also noteworthy, Indeed revealed on Aug. 3 that U.S. job openings
fell by “two points from last week” and that “job postings increased in
May, June, and July at a slower pace than in March and April.”

16. Job Postings On Indeed

17. Job Postings On Indeed - I
• At first glance, the results may seem disappointing.
• However, it’s important to remember that if job postings are
declining, businesses have likely filled the vacancies.
• Think about it: when a person is hired, the job posting is no
longer necessary.
• And with the latter declining at a time when enhanced
unemployment benefits have ended for roughly 30% of
Americans, the ‘coincidence’ signals that a restocking of the
U.S. labor force is already underway.

18. Allocation to the Dollar Rises

19. Allocation to the Dollar Rises - I
• The dark blue, gray and light blue lines above represent net-
long positions of non-commercial (speculative) futures traders,
asset managers and leveraged funds.
• When the lines are falling, it means that the trio have reduced
their net-long positions and are expecting a weaker U.S. dollar.
• Conversely, when the lines are rising, it means that the trio
have increased their net-long positions and are expecting a
stronger U.S. dollar.
• And if you analyze the right side of the chart, you can see that
the trio have upped their bullish bets in recent weeks (with
leveraged funds moving notably higher last week).

20. Gold: What's Going To
Happen After The Dust
Settles?

21. Thanks for listening
Gold: What's Going To Happen After The Dust Settles?